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Bank Charges

Volume 975: debated on Monday 3 December 1979

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asked the Secretary of State for Trade whether, if a clearing bank charges 20 per cent. on overdrafts and debits its customer twice a year with interest charges, the total annual charge on an initial borrowing of £100 shown at the year end should be £20 or £21.

The banks' charging arrangements are a matter for the banks. However, on the assumptions that the interest charges are capitalised at half-yearly intervals and that the customer does not increase the initial borrowing of £100 but repays it in full after one year, the total annual charge could vary between £21 and £21·28 according to when in the charging period the borrowing was made.