Banks show their greedy side again

Banks’ greed, it seems, knows few bounds. In some cases credit card and overdraft interest rates have gone up by far more than July’s 0.25% base rate rise.

The largest increase has been on two banks’ credit cards: a 5% rise over only a month on cash withdrawals. Authorised overdrafts have also rocketed – some by 3.4% in a year, despite the fact that interest rates have only gone up by 1.25% in that time.

The feeling is that banks are attempting to recover the many millions that they have been forced to refund in overdraft penalty charges. Barclays, Halifax, HSBC, Lloyds TSB and RBS-NatWest have already set aside £400m in compensation between them, and they will want to make that back in any way they can.

Lloyds TSB made nearly £2bn in profits in the first six months of this year. But apparently that’s not enough. They are taking some of their anger out on current account customers. The overdraft rate on is Classic Account has been increased by 0.3% from 19% to 19.3%, and on its Classic Plus account the rate has gone up from 18.6% to 18.9%. This is not the first time that Lloyds have pushed the overdraft rate up beyond the 0.25% increase – they added 0.3% after May’s quarter point base rate rise. Over the last 12 months the rate on the Classic Account has gone up by 3.4%, from 15.5% to 18.9%. Classic Plus account holders in the black are also being hit. Currently they get 3.4% in interest before basic rate tax on balances up to £5,000, but from 29 August this will only be earned on balances up to £2,500.

The commission charge on Lloyds’ debit card when used abroad has also just gone up, from 2.75% to 2.99%.

Bank of Ireland (Great Britain) has also increased its overdraft rate on high-interest current account by 0.3% from 20.15% to 20.45%. The unauthorised overdraft rate on this account has gone up by 0.34% to sky-high 39.49%.

The best overdraft interest rate is Alliance & Leicester’s Premier Direct account which offers 0% in the fist year, then 5.9%.

Banks are not the only ones making their customers pay more. Nationwide Building Society has increased its interest rate on cash advances on credit cards from 18.9% to 22.9% on its Gold, Cash Reward and Comic Relief cards. Nationwide’s Classic card sees its rate go up from 21.9% to 22.9%, and the fee for a cash withdrawal is up from 2% (minimum £2) to 2.5% (minimum £3).

Despite this, Nationwide still offers some of the best credit card deals as it doesn’t charge commission if you use your card overseas - as long as you don’t make cash withdrawals, of course.

Clydesdale and Yorkshire banks are putting their interest rates on Gold cards up by 1% from 14.9% to 15.9% from September, and the rate charged for cash withdrawals on both will be going up from 19.95% to 24.95% - a increase of 5%. If you have a Marks & Spencer store card but don’t pay off you bill in full you will now be charged 23.9% interest - up from 19.9%.

The commission Halifax charges on foreign credit card transactions has increased from 2.75% to 2.95%. Halifax has also increased the cost of cash withdrawals cash from 2.5% to 3%, and the purchase rate on its web-based One card, with a nine-month 0% purchase and balance transfer offer, has gone up by 4% from 9.9% to 13.9%.

Barclaycard has sent credit card cheques to some customers for balance transfers with a 3% fee, up from the standard 2.5%. However, it does offer the best borrowing rate on credit of 6.8% on its Simplicity card.

Barclaycard now offers great deals for you with their retail partners, free fraud protection, free Identity protection service, free Worldwide Assistance, free purchase delivery protection and free optional Barclaycard Alerts.

With Lloyds TSB’s Classic and Classic Plus account you get free banking (no charge for everyday transactions when you’re in credit), a VISA debit card you can use in over 500,000 places in the UK and 18 million outlets worldwide, access to one of the biggest banking networks in the UK with over 1,900 branches and 32,000 LINK cash machines, commission-free travel money.

Bank of Ireland’s headquarters are in Dublin, and its operations extend throughout Ireland and in the United Kingdom. The Group provides checking and deposit services, overdrafts, term loans, mortgages, international asset financing, leasing, instalment credit, debt financing, foreign exchange facilities, interest and exchange rate hedging instruments, executor, trustee, stockbroking, life assurance and investment fund management, fund administration and custodial services and financial advisory services, including mergers and acquisitions and underwriting. In the United Kingdom the Group operates mainly through Bristol & West plc, combined with the Group’s retail branch network. Bristol & West operates in selected markets and provides mortgages, savings and investments products to customers.