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News: Authorised overdrafts rates 'increase by 10%' News: Authorised overdrafts rates 'increase by 10%'

Authorised overdrafts rates 'increase by 10%'

Wed 24 Feb 2010 - Published in Banking

Authorised overdrafts rates 'increase by 10%'

The interest rates applied to authorised overdrafts have risen by ten per cent in the past two years, it has been claimed.

Andrew Hagger, of comparison service Moneynet.co.uk, pointed out that the average authorised overdraft interest rate has increased from 13.85 per cent in February 2008 to 15.32 per cent at present.

He explained that the interest charges applied to a £1,000 overdraft for six months in 2008 would amount to £69.25, while they currently stand at £76.63.

"No doubt lenders will point to increased risk and default levels as a result of the spike in unemployment seen during the recession," the expert continued.

However, Mr Hagger added that he is "not convinced" that the interest on overdrafts will return to normal once the economy recovers and unemployment starts to fall.

Recent research from price comparison site moneysupermarket.com found that ten per cent of Brits, or around five million people, permanently live in their overdrafts.