Overdraft cost cut at Alliance

ALLIANCE & Leicester Building Society this week joined the race to slash the cost of overdrafts when it announced a cut in annual rates for its new Alliance Account holders from 16.1 per cent to 9.5 per cent, writes Nic Cicutti.

It follows Nationwide, which announced earlier this week that its 1.2 million FlexAccount customers will now pay 11.5 per cent APR, down from 19 per cent.

FlexAccount holders with a Nationwide mortgage will only have to pay 8.74 per cent APR.

Other banks and building societies that have cut rates in the past few weeks are Woolwich, Abbey National and Halifax.

Chelsea, Yorkshire and Leeds Permanent do not allow overdrafts. Norwich & Peterborough has no plan to change its rates. The banks also said they did not intend to cut overdraft rates.

Halifax's overdraft, which dropped to 12.4 per cent APR in May, is now slightly more expensive than some of its competitors. A Halifax spokesman said it did not anticipate dropping it further.