Changes to overdraft charges could lead to rise in IVAs

Changes to the way overdraft fees are charged to customers banking with RBS/Natwest could lead to consumers with debt problems needing an IVA.

Customers who stray into the red of their overdraft limit will now be charged with £6 a day, from January next year.

This will be instead of the interest rate of 19.9 per cent on authorised borrowing, which the bank currently charges on unauthorised overdrafts.

Debt experts have said that constantly going into an unauthorised overdraft could be a sign of needing debt advice.

Although the intention by the bank is to simplify the charging system, these new rules could lead to those who dip into red on a frequent basis – but for a short period of time – looking for debt solutions.

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