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By Julia Kukiewicz
Editor
Friday, 14 May 2010
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AUTHORISED overdraft rates have continued to rise and are now the highest they've been for a decade, according to new research.
Despite the fact that the Bank of England base rate has remained at a low of 0.05% for the past 14 months, fees on current accounts have crept up.
On average, consumers are now charged 14.22% in interest when they borrow with their bank's permission.
Financial information service MoneyFacts - who carried out the research - noted that the last time overdraft fees had been so high the base rate had stood at 6%.
However, it seems to have been not the base rate but the long-running row over unauthorised overdraft charges.
Unauthorised Overdraft Charges
MoneyFacts suggested that banks have replaced the revenue stream they lost when many reduced or abolished one-off charges with increased overdraft charges.
After a supreme court ruling at the end of last year, it's now more difficult for consumers to reclaim those £25-35 a pop charges levied when you go over an agreed overdraft.
Even so, banks had already repaid around £1 billion pounds in unauthorised charges before the OFT put a hold on to start court proceedings in 2007.
The new Business Secretary, Vince Cable, has promised to encourage the banks to lend will be a top priority for his new department but, although millions of Britons rely on them, it remains to be seen whether they'll take any action on overdrafts.
0% Overdrafts
Many current accounts don't charge any interest on agreed overdrafts, freeing consumers from the worry of building up extra charges.
Barclays doesn't charge interest as long as you don't go over by more than £1000. While the Bank of Scotland does the same thing on amounts up to £300.
Other accounts keep agreed overdrafts interest-free for a
For example, new Alliance & Leicester current account customers charge 0% on agreed overdrafts for the first 12 months that you have the account and the Santander Preferred Overdraft account.
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