“A Government minister has accused high street banks of ripping off consumers with hidden charges after research commissioned by BBC One’s Panorama found customers could face interest rates of 167% on overdrafts.”
Source: BBC Panorama
While this was far higher than the advertised APR interest rate, other consumers also complained about Halifax which charged a flat fee of £1 a day on unauthorised overdrafts, which on a £10 overdraft would equate to an APR of £3,650%.
In reply, Halifax gave a statement that customers “want a clear overdraft charging structure” and the £1 a day represents ‘a simple set of daily fees’. The bank said it offered a ‘buffer zone’ for overdrafts of less than £10 that is free and that the vast majority of its customers do not use their overdraft facility.
Halifax have a point and as already stated elsewhere, APR or annual percentage rate is useful when comparing similar products, but an overdraft of £10 is unlikely to last a year and so the ’shocking APR is actually misleading, unlike the £1 a day fee which everyone can understand.
In a similar note, our payday loans are charged at £25 for every £100 borrowed and are to be repaid in full on the customers payday or in some cases next payday.
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