Barclays has provoked fury among some of its current account customers after announcing overdraft rates will increase by up to 5% on some current accounts.
The move, which will affect thousands of bank account customers, comes just days after Barclays announced it made pre-tax profits of £11.6bn in 2009.
The bank has also said it will pay £2.7bn worth of bonuses to its staff.
Overdrafts for graduates
Barclays customers with Graduate Additions accounts will be hit hardest by the decision to increase borrowing costs. The interest rate on these current accounts will increase from 9.9% to 14.9% at the end of April.
The Graduate Additions account is a packaged current account which comes with benefits such as breakdown cover and mobile phone insurance, and costs £7 a month.
However, Which? Money experts say packaged accounts like this – which can cost up to £300 a year – are not always worth paying for. You can read more about them in our free advice guide, Do I need a packaged bank account?
Overdraft charges increase
Another packaged current account to be affected by the changes is the Premier Life account, which already costs up to £25 a month.
Premier Life customers with overdrafts will see the interest rate charged on their negative balances go up from 12.9% to 14.9%.
Other Barclays current accounts that charge higher rates for overdrafts from 30 April include the Additions Active account, First Additions account, Current Account Plus, Barclays Bank Account and Platinum Barclays Bank Account.
Bank account switching
Peter Vicary-Smith, Which? chief executive, said: ‘The base rate hasn’t gone up and Barclays has just announced bumper profits, so many of their current account holders will be angry at this sudden increase in overdraft rates.
‘Any Barclays customer who’s unhappy with this rate hike should vote with their feet by shopping around and switching to a current account that best suits their needs.’
You can find out which current accounts our experts rate in the Which? current accounts review. For more information on the switching process, take a look at the How to switch your current account advice guide.
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