Banks clients in Croatia who use permitted overdraft have in the past two and a half years been charged 350 million kuna (€46.6 million) more than they should have been, Jutarnji List daily reported on Monday.

Clients using overdraft in their current accounts should be charged a maximum interest rate of 7.61 percent by their banks, however, banks have found a way to charge them close to 10 percent, without clients even being aware of that, the daily says.

Around 1.82 million people can use permitted overdraft in their current accounts, with around 95,000 having agreed permitted overdraft with their banks and paying the maximum allowed effective interest rate, while the other 1.7 million, if they use overdraft, pay a higher interest rate than they should.

The total amount of overdrafts in transaction accounts in June, according to data from the Croatian National Bank, was 6.3 billion kuna, and in the last five years it has dropped by 1.5 billion. Still, the number of people who use overdraft is still high. More than half a million people use the tacitly accepted overdraft, which amounts to 10,000 kuna (€1,333) on average.

According to rough estimates, citizens have paid banks around 140 million kuna more a year than they were supposed to or were aware of, or a total of around 350 million kuna in the last two and a half years.

Denis Smajo of the Potrosac (Consumer) association believes this case, too, could result in lawsuits.

“People should start asking their banks about this unfair practice and demand to be paid back the excessive interest charged. Any bank practice that is not transparent and whereby banks earn extra profit to the detriment of their clients is unfair, which makes banks decisions that increase interest rates above the legal limits invalid,” he said.

When in late 2018 banks switched from permitted overdraft to a tacitly accepted one, they explained that they were doing so due to “alignment with new rules” and that everything would remain the same, the only change being that the procedure for signing agreements on overdraft would be made more simple. Everything did remain the same, except for the price charged.

The Croatian Central Bank last week announced changes to regulations on overdraft to restrict the use of that bank product.