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Bank Overdraft Charges Rise Again

Even though we have seen UK base rates fall over the last few months there are signs that the retail banks are not following suit. A recent report by Money Facts claims that wide spreads increases in overdraft charges have been instigated and savings rates have been reduced by more than base rate cuts in many situations. This is sure to put the banks on a collision course with the authorities yet again and further harm the fragile reputation of the banking sector.

While the banks are legally obliged to inform customers of interest rate changes, many of the changes have gone relatively unnoticed in the financial press. There are reports of overdraft charges increasing by up to 3% and many traditional free overdraft zones being reduced or taken away. The banks are claiming that an increase in their underlying finance costs has meant that they are not able to pass on the full benefit of interest rate reductions at this time, but that does not explain the increase in overdraft charges.

At a time when the cost of living continues to rise, many of the UK population cannot afford increased charges on their overdraft and banking arrangements. There have been calls for the authorities to step in once again but many are wondering what they can really do.

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