Barclays cuts unauthorised overdraft fees

by Gill Montia

Story link: Barclays cuts unauthorised overdraft fees

As the High Court case over unreasonable bank charges lapses into an appeal that could delay the outcome for months, Barclays has announced that it is reducing its overdraft fees.

From 18th August, the bank’s £35 charge will be cut to £8 and its 11 million current account holders will also be offered a temporary authorised overdraft extension of up to £1,500 (£250 for the average account holder) for a one-off £22 set-up fee.

According to Barclays, the action has been made possible by improvements in its internal systems, although consumer groups have always put the actual cost of dealing with an unauthorised overdraft indiscretion in single digits.

With regard to the authorised extension, this will provide a personal reserve that can be used as often as needed but must be paid off within five working days, or a further £22 fee will apply.

It cannot, therefore, be viewed as an extension to an existing overdraft facility.

The bank is also ending credit interest on standard current accounts from 1st June and from 2nd June interest on overdrafts will rise from 15.6% to 17.9%.

The Office of Fair Trading estimates that UK banks have been making £3.5 billion a year from their unauthorised overdraft charges.