Report: Authorized overdraft charges rising in UK

According to new figures from price comparison website uSwitch.com, some banks in the UK have started charging more for authorized overdrafts even as they have declined to pass on interest rate increases to holders of current accounts. In some cases, the banks have actually cut the amount of interest they pay to account holders.

The new data shows that, on average, banks and building societies have upped the cost for authorized overdrafts by 0.93 percent over the past six months. At the same time, the Bank of England base interest rate has increased by 0.5 percent. uSwitch says that the changes have earned banks £52 million extra during that time. It expects that those banks that haven’t yet upped their overdraft rates will begin to do so soon.

Still, according to the website, it is possible to shop around for a better current accounts deal even if the account is in overdraft at present. The change would be handled much like transferring a credit card balance. According to uSwitch, Alliance & Leicester (LSE: AL), Halifax (LSE: HBOS), Nationwide, and Yorkshire Bank, a division of Clydesdale Bank, which is a subsidiary of National Australia Bank (LSE: NAB; ASX: NAB; NYSE: NAB; TYO: 8637) all currently have rates for authorized overdrafts that are below 10 percent. Alliance & Leicester, in fact, is offering a 0 percent 12-month introductory rate.

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