Over 2m UK Banking Customers Permanently Stuck in Overdraft
3 Minute Read
Using an overdraft has resulted in more than 2 million customers being stuck in a vicious borrowing cycle that they can’t get out of. Debt charity StepChange has discovered evidence of banks failing to ensure that customers were financially able to repay what they were borrowing. In the worst cases, customers made it clear that they were struggling financially but still were granted an overdraft by the bank.
Payday Loan Equivalent Fees for an Overdraft
The Guardian reported in August about “growing anger among some Lloyds and Halifax customers”. People had received letters advising them that as of November charges for using an overdraft were to see a significant rise. The rise doesn’t sound like much at 1p per day for every £7 overdrawn, but it has since been admitted by lenders that this is the equivalent of a 52% APR. These sorts of figures are usually associated with payday loan companies, not high street banks.
With the fees rising, it is becoming apparent that more and more people will struggle to get out of their overdraft. It is exceptionally poor behaviour by the banks to approve overdrafts to customers who are not financially stable, and then increase the overdraft fees to make it even more difficult. This just adds to the list of reasons for customers to be losing trust in UK banks. In additional to overdraft fees, our high street banks have been at the centre of the ongoing PPI scandal and the ever-increasing packaged bank account scandal.
The Good News
It may be possible for you to get some money back from the bank. Check out our previous posts on PPI and packaged bank account refunds to see if you qualify. Our experts are on hand to give advice on what options are available to you. Call us on our freephone number: 0800 007 3777. Alternatively, enter your details below and we will be in touch.