The Mirror - Make sure bank charges don't leave you with an Xmas hangover

Millions of us will go into the red to pay for Christmas - and with banks busy hiking overdraft rates, the New Year could bring a painful financial hangover.

Even though the Bank of England base rate has been cut by 2.75 per cent in the past year, interest rates on overdrafts have continued to go up, with some banks increasing rates by as much as 7.31 per cent.

The rises couldn't come at a worse time. One in 12 people say they will make "heavy use" of their overdraft facility around Christmas and may exceed their agreed limit, according to the Alliance & Leicester.

And one in five believe they are more likely to go overdrawn this Christmas compared with last.

Michelle Slade, of Moneyfacts.co.uk, said: "The base rate has decreased significantly in the last year but Abbey, Barclays, Clydesdale, First Direct, HSBC, Nationwide, Norwich & Peterborough, Royal Bank of Scotland, Smile and Yorkshire Bank are all charging their customers more than this time last year."

And this isn't the only bad news. Charges for exceeding an agreed overdraft limit have risen by a massive 20 per cent in the past year, with the typical charge now £30.

The increases come despite an investigation and court case by the Office of Fair Trading into the legality and justification of these fees.

The changes could affect as many as one in four adults, according to comparison website MoneyExpert.com.

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