Co-operative Bank current account customers who go overdrawn will see some fees fall from today, as the bank has revamped its charging structure.

The key changes see Co-op scrap its annual fee for having an arranged overdraft and it's also axing the fee for unpaid items, which is where a payment has been refused by the bank because there isn't enough money in the account to cover it.

It has also cut the maximum amount customers can be charged in fees from £150/quarter to £60/quarter. See our Cut overdraft costs guide for 10 ways to pay less on your overdraft.

The Co-op says the new overdraft fees structure has been "co-created" with customers following a consultation with users and adds that all of its 1.4 million current account customers and any new customers "will be better off" as a result.

The table below outlines what's changing for those with an arranged overdraft:

New and old arranged overdraft fees compared

Service

New fees/charges

Old fees/charged

Annual fee for having an arranged overdraft

No fee

£20

Unpaid charge (where payment fails as no money's in the account)

No fee

£15

Informal charge (applied when you go over the buffer and over agreed overdraft limit)

£10/day

£20/day

Overall fees cap

£60 per quarter maximum

£150 per quarter maximum

Buffer (allows you to go over your arranged overdraft by a set amount before fees are charged)

Up to £20

Up to £20

Waiver (allows you to go into an unarranged overdraft before any fees are charged)

Six days return to agreed limit, once a year

Six days return to agreed limit, once a year

Interest charged on overdraft

18.9% AER (i)

18.9% AER (i)

(i) 18.9% EAR applies to the following current accounts: Current Account, Current Account Plus and Smile Current Account. The Student Account offers 0% EAR on student limit of £1,400 in year one, 9.9% EAR on arranged overdrafts above student limit, and 18.9% EAR on unarranged overdrafts.  

What about unarranged overdrafts?

An unarranged overdraft is where you spend more money than you have in your account but you don't have an agreement with the bank to do so. Customers face a £10/monthly fee the first time they go overdrawn, followed by a daily fee.

Here's what's changing for these customers:

New and old unarranged overdraft fees compared

Service

New fees/charges

Old fees/charged

Unpaid charge (where payment fails as no money's in the account)

No fee

£15

Informal charge (applied when you go over the buffer into an unarranged overdraft)

£10/day

£20/day

Overall fees cap

£60 per quarter maximum

£150 per quarter maximum

Buffer (allows you to go into an unarranged overdraft by a set amount before fees are charged)

Up to £20

Up to £20

Interest charged on overdraft

18.9% AER (i)

18.9% AER (i)

(i) 18.9% EAR applies to the following current accounts: Current Account, Current Account Plus and Smile Current Account. The Student Account offers 0% EAR on student limit of £1,400 in year one, 9.9% EAR on arranged overdrafts above student limit, and 18.9% EAR on unarranged overdrafts.  

Martin Lewis
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'Puts customers in control of their finances'

Matthew Carter, products and marketing director at the Co-operative Bank, says: "This is a significant development of our current account proposition. It marks the commitments laid out in our recently re-launched Ethical Policy to listen to our customers and involve them in the creation of our products.

"This allows us to develop offerings which help put customers in control of their finances – and remind them of what we stand for."

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