uSwitch.com: NatWest's second increase to authorised overdraft rates in three months

Following NatWest’s latest announcement to increase authorised overdraft interest rates for the second time in just three months by more than double the average increase announced by Lloyds TSB earlier this week, Nick White, Director of Financial Services at price comparison and switching website uSwitch.com comments:

“Just as we thought that Lloyds TSB had delivered a nasty blow to current account customers by increasing authorised overdraft rates by an average of 1.05% from 14.8% EAR to 15.85% EAR, it seems NatWest has really pushed the boat out with an average increase of 2.48% from 14.96% EAR to 17.44% EAR which is more than double that of Lloyds. Between them, they will generate an additional £47.93 million in revenue in 2007 through 4.5 million customers that are regularly overdrawn across both banks.

“We revealed earlier this week that the changes made by Lloyds would generate an extra £19.32 million in revenue in the next year. Our latest figures show that NatWest’s changes could be more profitable, we estimate that they will generate an additional £28,61 million in revenue.

“Customers of Natwest who regularly find themselves overdrawn should consider switching away to a provider that charges lower overdraft rates, such as Alliance & Leicester’s Premier Direct current account which offer a 0% 12 month introductory rate which reverts to a 5.9% typical EAR. A customer switching to this account with the average overdraft of £677 would save £114.14 in just one year.”