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Monday 24th September 2007
Alliance & Leicester has announced that it will no longer charge interest on overdrafts run up by its current account customers, as part of wider plans to simplify its charges.
Daily fees will be introduced instead, with customers now paying 50p a day, up to a maximum of £5 a month on overdrafts of any size, instead of the interest of between six and 17 per cent previously paid.
Under the new tariff, unauthorized overdrafts will be subject to a single charge of £5 a day while the overdraft continues, rather than the previous double whammy of interest, plus a £25 fine on the first day and again on the fifth day of being overdrawn.
The charge for bouncing a cheque will be reduced to £25 from £34.
Andy Bayes, head of current accounts at the bank commented: "Alliance & Leicester is committed to offering free banking for customers who stay in credit - our research confirms that 94 per cent of people agree that having a bank account should be free.
"Alliance & Leicester is the first UK bank to abolish overdraft interest for all its customers.
"The changes we are making mean that customers using their agreed overdraft will never pay more than £5 a month, regardless of the amount they are overdrawn or the number of days - and very many will pay less."
Many commentators have suggested that recent changes mean that the future of free banking is uncertain, because slashing bank charges is not a sustainable move in the long-term, meaning that a monthly or annual fee for holding an account could become standard..
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