Unauthorised overdraft customers charged 167%

Customers who go over their overdraft without permission could face charges of 167 per cent a year, which could affect a debt management plan.

Consumers face fees and penalties for going overdrawn, if a cheque bounces or a direct debit cannot be paid, which can amount to 167 per cent a year in total.

That is according to a report from SG Hambros and the BBC's Panorama programme, which found that some banks were misleading customers, reports the Guardian.

The BBC found that high street banks charge, on average, an annual rate of 32 per cent on authorised overdrafts despite advertising rates of around 19 per cent.

Furthermore, people on a debt management plan may find it difficult to pay off if they keep getting charged for going overdrawn. They will have less money for repayments.

Christine Ross, SG Hambros group head of financial planning, told the BBC programme: "What we found is that unless individuals really scrutinise the small print, the overdraft rates charged are far higher than they could even imagine."

However, Lloyds TSB customers could avoid high overdraft rates as the bank will reduce the amount it charges those who go overdrawn from December. Exception: Stack empty.