UK banks charging as much as 800,000% on overdrafts

[dutchman]

Some High Street banks are charging "eye-watering" rates of interest when their customers go over their overdraft limit, research by Radio 4's Money Box programme has revealed.



A customer borrowing £100 for 28 days without the consent of Santander would repay £200, for example.

That is the equivalent annualised percentage rate, or APR, of 819,100%.

Eric Leenders, from the British Banking Association, said that the industry was willing to look at concerns.

But he said that using APRs to calculate the cost of unauthorised borrowing was a "mathematical manipulation" because the fees are representative of borrowing on an overdraft facility, not for borrowing the specific amount of money.

Mike Dailly, from the Govan Law Centre, said the government must review unauthorised overdraft charges.

"What we've got here is banks with equivalent APRs of nearly one million percent. It really is eye-watering."

Comparisons between banks and so-called payday lenders showed that the annualised percentage rate charged for borrowing £100 over 28 days varied from 969% to 819,100%.

No payday loan lender charged an APR of more than 5,000% but two banks - Santander and Lloyds TSB - charged an equivalent APR of more than 300,000%.