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Friday, 8 July 2016
Overdrafts more expensive than payday loans, says Which?
In response, the banking industry said that unplanned overdraft charges are much lower than they used to be.
A spokesperson for the British Bankers Association said:
"Across the board overdraft charges have plummeted since 2008, with consumers saving up to an estimated £928 million over the past five years; one bank recently reported its customers are saving £100 million per year as a result of text alerts."
Banks advise their customers to use a planned overdraft facility wherever possible.
HSBC, for example, said borrowing £100 for 28 days through this method would only cost £1.40.
Payday loans have been capped by the Financial Conduct Authority (FCA) since January 2015.
"The regulator has shown it's prepared to take tough action to stamp out unscrupulous practices in the payday loans market, and must now tackle punitive unarranged overdraft charges," said Alex Neill, director of policy and campaigns at Which?