Current account holders are secretly paying £150 a year in bank charges, despite claims that they will incur no fees.
Banks market accounts as ‘free’ by not applying upfront fees, but in reality profits are made through manipulation of interest rates on current accounts.
Lloyds Banking Group retail director, Helen Weir told MPs “The typical amount a customer pays for their current account, including forgone interest, is approximately the same as a cup of coffee a week.”
Perhaps a minuscule cost for high flying figures like Weir, this weekly premium cup of coffee comes in at £2.90 a week, costing current account holders £150 per year.
Labour MP Chuka Umunna told the committee that many locals in his London constituency of Streatham would think £150 a year was ‘a lot of money’.
The MP particularly criticised Lloyds’ ‘exorbitant’ new overdraft charges of 19.3%, which were introduced last week.
Lloyds Bank, which is 41% owned by taxpayers, has been accused of enjoying ‘monopoly profits’ within the banking industry.
Despite overdrafts being previously authorised, Lloyds now charges a £5 monthly fee if the overdraft is used.
Both chief executive Eric Daniels along with Mrs Weir insisted that the profits created through their current account business were ‘not excessive’ and deemed them significant to the cost of offering current accounts, such as branch overheads and staff.
The controversy has emerged after figures from the Bank of England, show an increase on the average interest rate on an agreed overdraft, shooting to an all time record of 19%.