By Myra Butterworth, Personal Finance Correspondent
Published: 3:37PM GMT 19 Feb 2010
Barclays increases overdraft rates
The banking giant is increasing the interest it charges people who go into the red by up to 5 per cent from the end of April.
The rate increase will affect around a fifth of the group's current account customers.
The move comes just days after Barclays announced a 92 per cent jump in pre-tax profits to £11.6 billion, helped by the sale of its fund management arm and a strong performance by investment banking business Barclays Capital.
The record results saw Barclays paying out £2.7 billion in bonuses, £1.5 billion of which was in cash.
Peter Vicary-Smith, chief executive of consumer group Which?, said: “The base rate hasn't gone up and Barclays have just announced bumper profits, so many of their current account holders will be angry at this sudden increase in overdraft rates.
“Any Barclays customer who's unhappy with this rate hike should vote with their feet by shopping around and switching to a current account that best suits their needs.”
But Barclays defended the move.
A Barclays spokesman said: “We are continually reviewing our rates to ensure we get the balance between the cost of providing the overdraft and the associated risk and on that basis some of our current account overdrafts will increase from the end of April.
“The majority of our customers will not be subject to any overdraft increases as our standard Barclays Bank Account remains unchanged.
“The daily increase for someone using an authorised overdraft, beyond their interest free limit, on their Current Account Plus account of say £600 is 1p.”
The group's Graduate Additions account will see the biggest increase, with the authorised overdraft rate rising from 9.9 per cent to 14.9 per cent, followed by the Additions Active and First Additions accounts, which will both see an increase of 3.4 per cent to 18.3 per cent.
The other current accounts affected by the increase are the group's Premier Life, Current Account Plus, Barclays Bank Account with executive overdraft and Platinum Barclays Bank Account.
Two of the accounts are no longer available to new customers
First: let's get some context about why this article is directly related to the recession. Robert, can you be more clear on this?
ReplyDeleteThere is a point in here about how the interest rate has gone up without the base rate changing. Can somebody please explain the theory behind this?