06/10/03

A survey published by Nationwide Building Society today reveals that people in the UK are not always aware that they go overdrawn:

-37% of people are surprised when they get statements and discover they have gone overdrawn;
-One in five account holders who have not got an agreed overdraft facility with their current account provider admit to going overdrawn.

Without an agreed overdraft, going overdrawn can be very costly. Customers without an arranged overdraft will usually be charged a higher rate of interest and incur a fee of almost £30. For example, being overdrawn by £500 for just one month could cost as much as £32.30 if unauthorised, yet as little as just £2.73 with an authorised rate.

In addition, the research revealed that people lack vital knowledge about overdraft rates, fees and procedures:

-Seven out of 10 people in the UK have an overdraft, but over two-thirds of overdraft users do not know what rate of interest they pay when they are overdrawn;
22% of people think that overdrafts are too complicated to set up, and yet in most cases at -Nationwide a decision can be made within minutes by applying online, by phone or in the branch;
-Almost 50% would expect to be charged a fee when setting up an overdraft, yet with most high street providers this service is free

Steve Clode, Nationwide’s marketing director, said: "Going overdrawn when you don’t have an arranged overdraft can be extremely expensive. Setting up an overdraft is a sensible precaution, even for people who don’t ever intend to go overdrawn. None of us know what unexpected expenses are just around the corner.

"Half of people use an overdraft, with 20% being regular users. Anyone looking for a new current account who will use their overdraft facility should be aware that even authorised overdraft interest rates vary considerably between banks and building societies. Nationwide’s competitive overdraft rate of just 6.75% is less than half that charged by the big four banks."

Provided by the Nationwide