Around 30m people are unaware how much they will be charged when they go overdrawn

Around 30m people are unaware how much they will be charged when they go overdrawn on their current accounts according to the latest research from financial website MoneyExpert.

The study found that even though there has been widespread coverage about bank fees, consumers still did not know the amount they would be charged for being in the red.

Over two-thirds of those interviewed admit to being unsure of the costs involved with being overdrawn, equating to around 30 million of the population, with over a third believing it was roughly 5 per cent.

35 per cent of those questioned thought the rate for an authorised overdraft was around 5 per cent, which is less than half the average of 12.35 per cent. Almost a third (32 per cent) thought it was between 5-10 per cent.

When it came to unauthorised overdrafts, the study found the average rate to be 25.62 per cent, yet around 5.2m people believed that it was 10 per cent or less.

Chiltern’s Joanne Gill says: “Despite their being much coverage of bank charges in the media, people are still unaware how much they are being charged when they go overdrawn.

“Going in to the red can be extremely expensive, with average unauthorised overdraft interest rates over 25 per cent. Add to this the fees for going overdrawn without permission that can be as much as ¬¨¬£30, and it very quickly mounts up.

“This could send millions of households in to a spiral of debt that they may find difficult to escape from, so it’s vital that consumers check their rates and ensure they are borrowing money at the most competitive rate.

“If they are already struggling to keep up their financial commitments I’d recommend seeking advice as early as possible, to prevent any further charges and interest accruing.”