High street banks charging more for short term borrowing than payday loan companies
The cost of an unauthorised overdraft with one of the UK's part-nationalised banks can be more expensive than going to a payday loan company, an investigation by the Mail reveals.
Lloyds TSB were exposed as the worst offender, charging a massive £216.32 for someone who goes overdrawn by £150 for ten days without permission. Halifax, which is part of the Lloyds Group, charges £50, while Barclays - which avoided being part of the bank bail out - has a charge of £44.
Payday loan firms, which lend small amounts of cash to people who often struggle to get credit elsewhere, have come in for fierce criticism concerning their rates of interest and fees which in some case is equivalent to more than 3,000% a year.
However, the charges levied by the banks mentioned above are all higher than those charged by some payday loan companies. For instance Payday UK would charge £37.50 for lending £150 for tens days.
Royal Bank of Scotland, another bank which received financial backing from the taxpayer, charges a more reasonable £20.73. HSBC charges only 75p if it is the first time a customer has gone overdrawn in a six-month period.
These charges are for unauthorised overdrafts, where the borrower does not have permission to take the money. But many people who go to payday loan companies do so because they cannot get an authorised overdraft.