Consumer watchdog shows overdraft rip off
Some banks are ripping off account holders with overdraft interest rates way over what they pay to borrow money, a consumer group said on Tuesday. The rates charged are often kept secret until too late for customers.
"Banks charge their customers up to 15.32 percent interest when they overdraw their cheque accounts, and that's despite the fact that they can borrow money for 0.75 percent themselves," consumer watchdog Stiftung Warentest said.
"Customers often do not find out how high their bank's interest rate is."
The group's comparison of 1,566 banks will be published in the magazine's November edition. Just over 350 of the financial institutions surveyed provided information on their rates voluntarily. Stiftung Warentest said its testers had to resort to "investigative methods" in some cases for nearly 600 other institutions.
The group was unable to secure any information on overdraft terms and conditions for about a third of the banks - which gave a range of reasons for staying mum.
One of them, Volksbank Senden, complained that Stiftung Warentest "did not treat banks well," the consumer group said. Others pointed the finger at their competitors, claiming they would not answer truthfully, while many simply said they did not wish to take part in the survey.
On average, banks charge 11.76 percent interest on overdrafts which - although lower than the previous year's average - Stiftung Warentest said was still too high, since the rates banks pay to borrow money has seen sharper decreases than overdraft rates.
Some banks stood out as particularly troublesome for people who have trouble balancing their cheque books. The Raiffeisenbank Fischenich-Kendenich in the state of North Rhine-Westphalia, for example, charges all customers 14.25 percent interest for overdrawing their accounts.
But there were bright spots in the list: More than 62 of the banks surveyed charged less than 9 percent in overdraft interest.