Santander doubles overdraft fees

AP Photo/Jasper Juinen

Existing Santander customers will face higher charges for going overdrawn, after the bank announced plans to increase fees and interest rates across its current account range.

Consumer watchdog Which? has revealed that the bank is doubling its daily arranged overdraft fee on all accounts other than its Zero Account from £0.50 to £1, from 16 March 2012.
Santander had also increased the fee cap for its Preferred Overdraft Preferred Rate Account from 15 to 20 days per month, meaning that you could pay up to £20 per month if you are using an overdraft facility for an extended period.
The Preferred Overdraft Rate Account has also been renamed the Everyday Current Account.

Interest rate rises

Zero Account customers are not completely unaffected by the changes either, as they face an interest rate rise. Santander will hike the interest rate on both arranged and unarranged overdrafts up from 12.9% to 18.9% EAR (variable) from 16 April.
From 20 December last year, Santander did at least stop charging a daily fee for customers who were overdrawn by £12 or less, using either an arranged or unarranged facility.

Shopping around

Santander is heavily marketing its current accounts to new customers at the moment with attractive headline rates and free overdraft facilities available for the first twelve months. It's an indicator once again that financial institutions simply don't reward customer loyalty, instead relying on our apathy to keep our custom.

Matt Woodington, Which? analyst, said: "It is existing customers that will be charged more, highlighting the importance of regularly shopping around for the best bank account and being willing to switch where necessary.

"This can ensure that you receive the best interest rates for your savings, incur lower charges if you do need to use your overdraft and also benefit from the switching incentives that banks often offer."

So what are your other options? Halifax are offering £100 to customers switch to their current account, plus they'll pay you £5 for each month you pay in at least £1000. Meanwhile HSBC's current account special offer gives customers a whopping 6% interest on current account balances up to £2,500 plus an interest-free overdraft for 12 months.
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