Bank axes its interest charges on agreed overdrafts

STRUGGLING consumers received a New Year boost yesterday, when the Co-operative Bank revealed it was scrapping interest charges on agreed overdrafts for the next three months.
By The Newsroom
Published 3rd Jan 2012, 06:00 BST

A current account customer with an agreed overdraft of £2,000 could save £75 in fees over the “interest free” period. The bank said customers will automatically have the interest charges put on hold on the overdrafts which qualify. Customers will not be asked, at any point, to pay the interest which would have accrued.

Robin Taylor, the head of banking at the Co-operative Bank, said: “This move again highlights how we are looking to bring some much-needed competition to the high street, by providing customers with a genuine alternative to the big five banks.”

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The offer applies to agreed “formal” overdrafts, where a customer has requested an overdraft service in advance, and this has been agreed. It includes standard overdrafts provided with the Current Account Plus as well as formal overdrafts with the Privilege, Privilege Premier and smilemore accounts. But it excludes Cashminder and Student accounts, Business banking and Corporate banking current accounts.

The interest free overdraft period covers debit balances from January 5 to April 4 inclusive and any account still overdrawn after this date will revert to the usual charges.

Any customer who applies for and receives a formal overdraft while the offer is running will also pay no interest on agreed debit balances from when their overdraft is set up until April 4.

A formal overdraft lasts for 12 months and the bank charges £20 to set up or renew it.

The Co-operative Bank said its research showed the typical British adult built up just over £749 of debt last year.