July 19 (Bloomberg) -- Germany’s banks are levying excessively high interest rates on overdrafts, Sueddeutsche Zeitung said, citing a report due to be presented today by Federal Consumer Protection Minister Ilse Aigner.
The 254-page report, drafted by the Center for European Economic Research and the Institute of Financial Services, found that the charges for overdrafts largely exceeded the cost and that the extra money was used to cross subsidize other products and boost profit, the newspaper said.
German banks charged on average 12.4 percent on overdrafts, with some charging as much as 18.25 percent, SZ reported.
The two institutes rejected bank’s argument that the high interest rates were needed because of the higher risk of default on smaller loans, the newspaper said. There are about 40 billion euros ($49 billion) in outstanding overdraft loans in Germany, the newspaper said.
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