NatWest and RBS cut the price of unarranged borrowing

NatWest and RBS have announced that they are to significantly reduce the charges for customers who go overdrawn without agreement or exceed an agreed overdraft limit. The cuts, which will be effective from 1st October, will see the fee for returning a cheque, direct debit or standing order cut to £5. The fee for paying an item when overdrawn will be cut by half to £15 per day.

Announcing the moves, the new CEO of the UK Retail Bank, Brian Hartzer, said: "This is good news for customers, not least because the fees for unarranged borrowing have been an area of ongoing concern for them. As we look ahead there are many issues to consider, but we thought it was time to move this particular customer concern forward by cutting our charges.

At RBS our support for our customers must be at the core of all that we do as we work to return the bank to standalone strength. We are changing what we do as a bank and the way we do it. Today's announcement is one more example of the determination we have to support our customers.

As it relates to past charges we are awaiting the outcome of the industry-wide bank charges test case. Our aim, which has remained unchanged throughout the case, has been to gain legal clarity around this issue and we remain fully committed to it through the legal process."

Details of the reductions are:

Unpaid item fee reduced to £5 from £38 (maximum £50 per month, reduced from £114 per day)

Paid referral fee reduced to £15 from £30 (maximum £90 per month)
Guaranteed card payment fee reduced to £15 from £35 (maximum £90 per month, reduced from £105 per day)
Maintenance charge reduced to £20 from £28
Unarranged borrowing rate of interest reduced to 19.24% EAR

Helping Customers Avoid Fees

The Bank has already taken a number of steps to help customers avoid fees.

NatWest and RBS customers can avoid paying any unarranged borrowing charges by agreeing their borrowing requirements in advance, which is a simple and straightforward process. The Bank also offers customers a current account option that suits customers who frequently use an unarranged borrowing service. This account option carries unarranged borrowing fees pegged at £5 if customers pay a monthly fee of £10.

Customers are also able to keep a check on their account through branch, cash machine, phone and Internet, as well as through a free text alert messaging service which provides advance warning if they reach a certain limit determined by the customer.