By Kate Brown
A consumer group has warned that banks are charging up to seven times more for unarranged overdraft fees than a payday loan. Which? said that the sky high fees can add up to thousands of pounds a year.
In a study conducted by Which?, the cost of borrowing £100 for 30 days in an unarranged overdraft, was compared across 16 high street banks with borrowing the same amount through a payday loan. Findings revealed that 13 of the banks investigated charged considerably more than a payday lender.
Which? has urged the Financial Conduct Authority to impose limits and end this “unfair practice”. The FCA agreed the charges are often “too high”. Which? is also calling for the charges of unarranged overdrafts to be reduced to the same level as arranged overdrafts.
The FCA is examining the high cost credit market and will publish a report next week.