Frodo Financial launches overdraft service

| October 8, 2012 | 0 Comments
Frodo Financial launches overdraft service

Frodo Financial, a new financial technology company, has launched an online overdraft system which provides an alternative to a bank overdraft.

The new Frodo Flexi account provides a rolling cash-credit facility of between £1,000 and £10,000 that runs alongside a customer’s current account with their existing bank.

It offers a 16.9% APR variable interest rate which starts accruing on the day money is borrowed and is payable monthly.

Frodo Flexi is available to people over the age of 21 years, who are earning at least £22,000 per annum.

Account holders can use their account to pay for goods and services directly with more than 2,500 online retailers or can use it to top up their current account.

Transactions made with Frodo are protected under section 75 of the consumer credit act in the same way as credit card transactions.

Kevin Lewis, chief executive for Frodo Financial, said: “we are launching the Frodo Flexi account to give a better deal to those four million Britons who are permanently overdrawn and the two million who start their month in the red even after being paid.”

The minimum monthly repayment is 10 per cent of the outstanding debt plus interest.

The 16.9 per cent interest rate charged by Frodo is much lower than the interest rates charged by payday loan companies, and is also lower than the rate charged by many banks on authorised overdrafts.

However personal loans may charge a significantly lower interest rate, and credit card offering zero per cent on new purchases are available.

Meanwhile, the Fairbanking Foundation expects the UK Accreditation Service to approve its savings accreditation scheme by the end of the year.

The Foundation, which was established in the belief that banking providers should act in the ‘common good’, has awarded its accreditation marks to thinkmoney’s Personal Account; Secure Trust’s Current Account; RBS/NatWest Your Savings Goal and Lloyds TSB Classic Account with Control.

The marks are given to accounts which help the customer to control their money better and achieve their financial goals.

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