Martin Lewis warns Metro Bank, Lloyds, Natwest, First Direct customers of 'hideous' charge

Money guru Martin Lewis has issued a stark warning to bank customers about a grave error that could leave them financially worse off. The founder of the Money Saving Expert site voiced his concerns after conducting a poll on social media platform X, asking how many individuals permitted themselves to slip into their overdraft.

Mr Lewis emphasised the importance of being aware that the interest rates charged for entering an overdraft are typically around 40 per cent, which is even more severe than most credit cards. He stated: "Overdrafts are a danger debt typically at a hideous 40% Apr, nearly double even a high street credit card. If possible (I know it's not easy) you should prioritise reducing them ahead of most other debt."

"A typical interest-free overdraft is about £250, to help ensure that bills are paid even if someone doesn't have enough money in their account. But the interest charged on overdrafts beyond the free level is very expensive at about 40% APR on many accounts. That means anyone finding themselves using one regularly should consider another form of borrowing to cut costs and clear their debt."

His followers agreed with one saying: "It's eye-opening how easily overdrafts can catch people off guard. Prioritising their reduction can save a significant amount in interest—definitely a smart financial move!" Another added: "Having an overdraft used to be a way of life for me until they inflated the charges to £25 a month! Paid it off and never had one again. Online banking has helped massively. Being able to check your balance while shopping is a debt avoided."

He also pointed out that high street banks such as Bank of Scotland, Halifax and Lloyds charge overdraft fees at a standard rate of 39.9%. It's