» Click here for the original article

Interest rates for bank customers who exceed their overdraft limit, or go into the red without an authorised facility from their provider have remained sky high over the last 12 months.

The base rate has fallen by 4.5% in the last year, but the cost of borrowing without permission remains punitively high at an average 18.2%, a meagre 1.7% from where it stood at 12 months ago, according to MoneyExpert.com.

Those customers who have authorised overdraft facilities are likely to have seen no change at all in the interest they pay their bank, with the average authorised overdraft rate remaining firmly fixed at 13.5% – 27 times higher than the base rate.

Pierre Williams, head of research, MoneyExpert.com, says: “It’s galling for customers who’ve seen savings rates plummet over the last 12 months to realise that banks are refusing to budge on the rates they charge for overdrafts.
Living in your overdraft is never a wise move, but many people rely on the flexibility overdrafts offer to tide them over in a difficult month."

Also, 80% of current accounts also continue to make punitive one-off charges for customers who exceed their overdraft facility. These range from £5 upwards, with 16 current accounts charging £30 each time a customer uses an unauthorised overdraft, according to the website.

If you are living on an overdraft it's time to take control of your money and begin clawing yourself back into the black. Debt spirals, so as soon as you find yourself in the red, and don't do anything about it, you will spiral into more and more into the red. And the longer you let this happen, the more out of control it becomes – so talk to an independent financial professional as soon as you can if you are struggling to get out of your overdraft, because it will only get worse.

SOURCE: MoneyExpert.com, 22/06/09

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.