Bank Overdrafts found to be more costly than Short Term Loans

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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 short term 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