Some bank clients have to pay 12 times more for their overdrafts that if they used payday lender services.
Clients who have overdrafts by even £100 need to pay much more than the payday lenders are allowed to charge for the same sum of money.
The Financial Conduct Authority stated their cost caps for payday loans at the beginning of the year, but these rules somehow don’t relate to banks.
Which? have done an experiment by borrowing £100 from different banks for 28 days. As the result, some banks have charged about £90 on top of the sum. This is 4 times more than the largest charge of £22.40 that payday lenders offer. The highest charge for a day on £100 for payday lenders is not more than 80p. To compare, the clients of Lloyds’ Classic Account will have to pay 12 time more – £10.
Which? is calling for a crackdown on unarranged overdraft charges and wants the City watchdog to review the fees in the context of other forms of credit.