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Bank charges for overdrafts excessive, report claims

The Bank of England has revealed that soaring bank charges on overdrafts could be having a negative impact on consumers, with the average rate reaching 19.65 per cent.

This is nearly 40 times higher than the base rate, which is at an historic low of 0.5 per cent, reports the Daily Mail.

An overdraft of £1,000 utilised for a year would cost a consumer an additional £196, which could be especially problematic for those living on the breadline or using facilities such as this to pay their bills.

Andrew Hagger, a personal finance analyst from the website, said: "The record cost of overdraft borrowing is an unwelcome drain on the family budget which is already being hammered by rising fuel, food and energy bills."

He added that there is a concern the official figures do not show the actual cost of borrowing from banks.

Many Britons have turned to payday lenders in recent years, a trend that could increase with the government set to cap their base interest rate.

Amir Hussain

Amir specialises in personal loans, consumer debt and debt management.ADNFCR-2776-ID-801498776-ADNFCR

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