Royal Bank of Scotland slashes overdraft fees

Royal Bank of Scotland, which is majority-owned by the taxpayer, has said that it would reduce its future overdraft charges on its 12.5 million current accounts from subsequent month.

It should be noted here that RSB has been severely criticized by a consumer group for charging roughly eight times higher as compared to its rivals. The decision will affect customers of NatWest, the subsidiary of RBS.

Customers will witness the cost of a bounced cheque or an unpaid direct debit or standing order drop from £38 to £5. The fee for paying for an item on an overdrawn account has been cut to half from £30 to £15.

Louise Bond from uSwitch. com, said, "As the first provider to step up to the plate and do the decent thing before the outcome of the test case, we eagerly await the other big banks to follow suit."

As per an estimate banks in UK pockets around £2 billion annually from charging fees to customers who run overdrawn without seeking bank's consent.

It is note worthy here that RBS is awaiting the result of a test case on legal actions brought by a consumer group against lender's heavy charges.

The RBS has urged its customers to arrange borrowing in advance to avoid fees.