Soaring bank bills if you go into the red

TWO-THIRDS of current accounts now charge customers if they dip into a preagreed overdraft, figures reveal.

Seven years ago, just 22 per cent charged people if they used their overdraft. Today, this has almost tripled to 63 per cent of standard current accounts.

Customers are also being hit with hefty overdraft charges that are on average six times higher than in 2008.

According to the website Moneyfacts, account holders are now billed almost £12 a month when they go £300 into their overdraft for 15 days. This compares to just over £2 a month in 2008.

If someone did this every month for a year, ahead of their pay day for example, they could be forced to pay £140 in charges compared to just £26 in 2008.

Experts said banks had ramped up their penalties after replacing interest rates on overdrafts with set daily fees. While in theory this was designed to make it simpler for customers to understand charges, it was seemingly used as an opportunity to extract more money from those in the red.

Meanwhile, customers who dip into an unauthorised overdraft – outside their agreed limit – have seen their charges reduced, sparking claims that more prudent account holders are being punished instead.

Rachel Springall, of Moneyfacts, said: ‘Many people will be shocked by how much it now costs to temporarily dip into their authorised overdraft.’