Rising overdraft rates

Samantha Owens, Head of Personal Finance at Moneyfacts.co.uk, comments: “Following the base rate rises of the last year a number of current account providers increased their overdraft rates, and the July rise has seen this trend continue.

“The changes are normally delayed until the start of the following month, and so far we have seen five providers increase rates by up to 0.30%

Clydesdale Bank – authorised rates up 0.27%
Cumberland BS – authorised rates up 0.25%
HSBC - authorised rates up 0.20%
Lloyds TSB - authorised rates up by up to 0.30%
Yorkshire Bank - authorised rates up 0.27%

“With some authorised rates ranging as high as 20%, if you are someone who is regularly in the red, it’s worth shopping around for the best deal. Alliance & Leicester currently offers the best deal, with 12 months at 0%, followed by the lowest revert to rate on the market of 5.9% EAR.

“As long as you have operated your account within the agreed limit and meet the requirement of the new provider there is no reason why you can’t switch current accounts while you are overdrawn. In some cases providers will agree to match your existing limit as part of the switcher package.”