NatWest, Lloyds, HSBC and Santander warning over £278 'ghost charge'

An probe recovered that the mean lawsuit with an overdraft pays £278 successful involvement each year. Here's everything you request to know

Banking customers are being slapped with unnecessary charges averaging £278 yearly, with the imaginable for monolithic savings up for grabs by simply switching accounts. An probe revealed that your emblematic overdraft idiosyncratic is shelling retired £278 annually successful interest. According to TotallyMoney, determination are 9.7 cardinal Brits with an overdraft, and 1 successful 5 of these individuals remains overdrawn by £697 daily.

Steep regular involvement rates scope from 35 per cent to 49.9 per cent astatine galore precocious thoroughfare banks, dwarfing the recognition paper mean of 21.7% and idiosyncratic loans sitting astatine 8.69 per cent. TotallyMoney's main Alastair Douglas said: "Overdrafts are for galore a shade debt. They whitethorn person applied for, oregon been offered it years ago, and it simply sits arsenic an hold to their existent account. There's nary abstracted card, bank, oregon app - and the lawsuit whitethorn not adjacent beryllium alert that their overdraft is simply a benignant of borrowing, oregon that they tin beryllium rather expensive."

Douglas added to the alarm. He said: "And due to the fact that there's not the aforesaid equilibrium transportation offers you tin get with recognition paper debt, immoderate customers mightiness beryllium sitting successful their overdraft for all, oregon astir of the time. This means they mightiness beryllium paying involvement period aft month, and struggling to get backmost successful the black."

Lending his expertise, Andrew Hagger of Moneycomms.co.uk chimed in: "There was a clip erstwhile authorised overdraft rates were beauteous overmuch connected a par with modular recognition paper rates, but present it's precise different, with overdraft rates heading towards treble the complaint of recognition paper interest.", reports the Express.

"Paying from 35 per cent to astir 50 per cent for an overdraft is hard to justify, particularly arsenic this is for an agreed overdraft limit. If you're lone borrowing for the unusual time present and determination it's little of an issue, nevertheless if you're successful the reddish for a mates of weeks oregon much each month, these rip-off rates volition lone marque your fiscal presumption worse."

"Rates of 35 per cent oregon much are usually associated with borrowers who person erstwhile recognition issues and are classified by banks arsenic 'subprime' borrowers. Using a recognition paper tin beryllium a acold much cost-effective mode of managing your currency travel these days, adjacent much truthful if you're capable to wide your connection equilibrium successful afloat each month."

"It's casual to autumn into the wont of relying connected your overdraft period aft period and the precocious outgo volition soon marque a atrocious concern acold much serious."

Here are 5 tips for avoiding oregon lessening what you're spending connected your overdraft:

1. Spend your savings

"If you're sitting connected savings, it's precise improbable that you'll beryllium earning anyplace adjacent arsenic overmuch involvement arsenic you would beryllium paying connected your overdraft. So see utilizing this wealth to wide your balance, and past you tin absorption connected rebuilding the wealth successful the bank."

2. Change banks

"There are immoderate providers who'll springiness you an interest-free overdraft, and a bonus for switching. Which means you mightiness beryllium capable to wide immoderate of your debt, and halt paying involvement connected portion oregon each of what you owe. You'll conscionable request to retrieve that you mightiness request to walk a recognition check, truthful instrumentality a look astatine your report, and marque definite everything is close and up to date."

3. Consider a 0 per cent wealth transportation card

"A wealth transportation paper is similar a equilibrium transfer, but a spot much flexible. If your exertion is successful, you'll beryllium fixed a currency bounds which you tin determination from the paper to your slope account, and you tin usage it to wide your overdraft. You tin get up to 12 months interest-free connected the borrowing, but these cards bash travel with a transaction fee, and you'll request to walk immoderate eligibility checks."

4. 0 per cent acquisition recognition card

"It mightiness beryllium worthy considering a 0% acquisition paper arsenic you tin get up to 21 months involvement free. You could usage this to springiness yourself immoderate breathing room, and debar utilizing your existent relationship until you've cleared your overdraft debt."

5. A debased outgo indebtedness

"If you person a bully recognition people and a precocious overdraft limit, you mightiness beryllium amended disconnected applying for a idiosyncratic loan. You could unafraid an APR of beneath 10%, which is apt to beryllium cheaper than your existent overdraft complaint - and you could adjacent consolidate different debts. Just marque definite you bash the calculations first, and that you tin support up with the repayments."