Many RBS and NatWest customers face paying higher agreed overdraft charges after being automatically switched to current accounts with higher overdraft interest rates.
Approximately 140,000 customers with money in seven old accounts that the bank no longer offers will be moved to its standard Select account, which has an overdraft rate of 19.89% EAR.
NatWest charges a £6 monthly fee for authorised overdraft usage plus interest at 19.89% EAR. First Direct’s charging structure is 15.9% EAR but the first £250 of overdraft used is interest free.
The bank said it expects the switch to mean around a third of affected customers will see their overdrafts charges increase.
Those affected are customers with NatWest’s Personal Current and Gold Plus accounts and RBS’ Personal Current, Gold Cheque, Private and Private Banking current accounts and the Child &Co current account.
Personal Finance expert Andrew Hagger said: “There are plenty of cheaper overdraft options out there – this is a perfect example of why people should shop around.
“The cost of an agreed overdraft varies greatly between the main banks and building societies and because of the different types of charging tariff they use it’s a tricky job for consumers to fathom out the cheapest deal.”
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