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COMMENT
According to new research from Alliance & Leicester (A&L), 8½ million Brits are losing out on £710 million a year by overpaying for overdrafts with the "Big Four" banks. A&L's survey reveals that close to three-quarters of bank customers (73%) have an overdraft facility, with three in seven of them (42%) currently overdrawn. Indeed, almost a third of bank customers (31%) frequently slip into the red, while another third (34%) rely on their overdraft for everyday spending. Even worse, one in nine customers (11%) views their overdraft as extension to their salary. No, folks, it's an overdraft limit, not a target! Although the majority of current-account customers bank with one of the Big Four (Barclays, HSBC, Lloyds TSB and RBS/NatWest), two-thirds of these (66%) don't realise that they can switch to get a better deal, even while they're in the red. Meanwhile, the Big Four are making fat profits by overcharging millions of customers for overdrafts (particularly unapproved borrowing). Authorised rates from the Big Four range from 14.8% to 18.2%, while unauthorised rates can be as high as 29.8%! What's more, according to MoneyExpert.com, fines for unapproved overdrafts have risen by almost a third (32%) in the past two years. These days, someone slipping into the red without permission faces an average charge of £95 if their bank refuses one cheque, direct debit and standing order. Therefore, it's well worth watching your spending over Christmas - and keeping in touch with your bank. Otherwise, you could be hit by these outrageous penalties! Finally, let's get one thing straight: having an overdraft on its own will not stop you from switching to a Best Buy bank account. In fact, with banks cutting each other's throats to win personal customers, even a fairly sizeable overdraft shouldn't hold you back. So, why pay more interest than you need to? By switching to a Best Buy account, such as Alliance & Leicester's Premier Direct current account (which also offers an overdraft-matching promise), you could save hundreds of pounds a year in interest and charges. Here's to better (and cheaper) banking. Hurrah! More: View the great accounts in our Banking centre | Avoid interest with a 0% credit card!
