Barclays to reduce overdraft charges to single digits

| May 30, 2008 | 0 Comments

Last month saw the eight banks, who include Abbey, Barclays, Clydesdale, Halifax Bank of Scotland, HSBC, Lloyds TSB, RBS NatWest and Nationwide Building Society, lose the first stage of the legal battle against the unfair charges case.

However, it has now emerged that Barclays is to cut its overdraft charges. According to the bank, it has been able to reduce its charges as a result of breakthroughs in its handling systems, which has resulted in a more streamlined service.

From August 18, customers will only have to pay a penalty of £8 if they go overdrawn without authorisation. The new charge is part of an overhaul of Barclays’ accounts.

Furthermore, the bank said it will replace unauthorised overdrafts with a personal reserve of up to £1,500. This buffer zone will incur a one-off £22 set-up charge.

Customers can opt out of the personal reserve scheme and avoid the £22 set-up fee. The reserve, which will be around £250 for average accounts, can be used as often as the customer needs without repeat charges, which means going overdrawn at the end of the month will no longer result in a flurry of expensive bank charges.

However, customers should be aware that it is not intended to be an extension to an agreed overdraft. Should a customer fail to pay off the additional balance within five working days, they will be liable to pay another £22 fee.

Commenting on the revised charges, Mark Parsons, managing director of current accounts at Barclays, said after listening to customers feedback, they have completely revamped their unauthorised overdraft service, replacing it with the new personal reserve.

Barclays is confident that their products will promote account switching to Barclays.

In the past, consumer groups have claimed that the fees of £35 are unfair and actually believe that the administration costs to bank can be £2.50.

Consumer group, Which? welcomed the move and said people want simple and transparent banking and Barclays is going in the right direction.

The bank has 11 million current account customers.

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