Banks make £2.5 Billion from Overdraft Charges

Unauthorised overdraft charges alone mean that UK banks are raking in an extra £2.5 billion a year in profit, according to figures that the Office of Fair Trading (OFT) is expected to reveal later this month.

They are due to publish a study into overdraft charges on current accounts, which will confirm the amount that banks are making from these charges. This follows a ruling from the High Court which paves the way for a second hearing about what a fair charge should be, and banks could be forced to reimburse their customers if the OFT wins their case.

Overdraft charges can currently be as high as £35 for each bounced payment.

Annual results for the major high street banks show that they have so far refunded more than £559 million to customers who have complained about their charges. This figure is likely to be much higher as both the Nationwide and Abbey are refusing to publish their figures.