debt

Unauthorised overdrafts are now more expensive than payday loans.

Vulnerable customers are unaware that using unauthorised overdrafts can cost up to 12.5 times more than pay day loans if the period in question is just 24 hours.

The Financial Conduct Authority (FCA) in January 2015 introduced price caps on payday loans, with interest and fees capped at 0.8% per day of  the amount borrowed.

When customers go into the red without permission, the charging structure differs from bank to bank.

At Barclays, the 24 hour costs of this privilege can amount up to £29.75, Santander £67, meanwhile Lloyds, HSBC and TSB can each charge up to £80 .

Solutions to this could be phoning the bank and requesting an extension to the existing overdraft facility in due time or perhaps following a well-structured budget.

Courtesy of Silk & Co.