Bank Overdrafts found to be more costly than Short Term Loans

Research from consumer champions Which? has found that bank overdrafts can be eight times more costly than payday loans.

Borrowers needing as little as £100 could be charged up to £156 more by their bank than it would cost at a payday lender, it has been revealed.

Which? compared the cost of borrowing £100 for 30 days using an unauthorised bank overdraft.

It found some banks charge more than seven times the maximum £24 charge on a payday loan.

Customers who need £100 could end up paying as much as £180 in fees at their bank if they borrowed the money across two monthly billing periods, according to the findings.

Which? found that NatWest could charge £180 to borrow for 30 days over two billing periods – a difference of £156 compared with a payday loan costing £24.

Customers using Lloyds or Santander could be charged £160 to borrow across two billing periods, £136 more than a £24 payday loan, Which? found.

A PiggyBank payday loan of £100 will cost the consumer £24 for a 30 day period. The benefit of a PiggyBank short term loan is the customer is able to pay back early and save money on interest, as interest is applied on a daily basis. If a customer is unable to make their legally binding loan repayment due to a change in circumstances, PiggyBank will freeze the customer’s interest and charges, and work with them to clear the balance in a manageable way.

IN THE PAPERS

Bank overdrafts 8 times more costly than payday loans, study shows- The Financial Times

https://www.ft.com/content/a5f68312-ed52-11e6-930f-061b01e23655

Bank overdraft charges higher than those from payday lenders – Which? report- Sky News

http://news.sky.com/story/overdraft-charges-by-banks-higher-than-those-from-payday-lenders-report-10760017

The banks that charge more for an overdraft than a payday loan – an astonishing 650% more- The Mirror

http://www.mirror.co.uk/money/banks-charge-more-overdraft-payday-9775192

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