A&L softens overdraft charges

by Gill Montia

Story link: A&L softens overdraft charges

Alliance & Leicester (A&L) is introducing a daily fee for customers with overdraft agreements, whilst also pledging to continue to offer free banking to account holders who remain in credit.

The bank has reviewed the charging structure for its current accounts and from October, will become the first UK bank to end interest charges on overdrafts, for all its current account customers.

From next month current account holders with an agreed overdraft facility will pay a daily “overdraft usage fee” of 50p, and this will be capped at £5 a month.

The bank will not make a charge for agreeing an overdraft and the 50p per day tariff applies only when the overdraft is being used.

However, A&L customers who exceed their authorised overdraft limit or go overdrawn without an overdraft agreement, will be charged £5 per day.

Currently A&L charges for going over an agreed limit stand at £25 on the first day and £25 on the fifth day, with a maximum charge of £50 a month.

The new £5 daily charged is not capped, so a customer exceeding his or her overdraft limit for a full month could pay up to £155.

Despite this, uSwitch.com, the price comparison website believes the changes being made by A&L are broadly positive.

They could also be interpreted as a further indication that High Street banks are anxious to prove they are working in their customers’ best interests, ahead of the High Court case being brought by the Office of Fair Trading to test the law on unreasonable charges.