Banking customers who expect to fall into the red this month could halve the level of interest accumulated if they arrange an overdraft with their financial services provider beforehand, according to the latest figures.
Analysing figures from financial research group Defaqto, financing website MoneyExpert points out that the average interest repayments on an unauthorised overdraft currently stand at 25.4 per cent.
By way of comparison, the organisation points out that if the banking institution has been notified beforehand that the customer is likely to exceed their agreed overdraft limit, this figure can fall to 12.6 per cent.
Moreover, it is pointed out that one financial services provider offers an overdraft of zero per cent for the first year on a couple of its banking account offers.
Sean Gardner, chief executive of MoneyExpert, underlined the moral of the story.
"The message has to be if you are going to use your overdraft, make sure your authorised limit is big enough and if it isn't, tell your bank before you go over the limit," he said.
"If you are unhappy with the service from your bank, then you should move," he added.
Those banking customers who have recently graduated from university may find that they are having financing difficulties because their overdraft is automatically reduced every year.
In this scenario, customers may be able to negotiate an extended overdraft limit from their banking services provider.
Banking customers advised to negotiate overdrafts in advance
Banking customers advised to negotiate overdrafts in advance
Thu, 18 Jan 2007
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