Natwest changing overdraft - looks for the worse. Can anyone make it clearer for me?

[NemophilistRebel]

This is the email I received just now from Natwest where I currently hold all my accounts (5)

Typically on a month like January where it is long I may dip into around £500 if overdraft.

Up until now the cost to do so has been minimal

I’m worried that by nearly doubling the interest rate to 34.49% that this is going to cost me a lot more

Does anyone know how I can correctly calculate this as obviously dipping into my overdraft isn’t something that then stays there for a year to work out the yearly percentage total

Thank you

I’d try to calculate instead how I can chip away at the overdraft. £500 is doable over a few months and January is no longer than March, August, October etc!

It's an FCA change, so this is happening across the board, so you might struggle finding a bank that aren't doing this...

Presuming that you are £500 into your overdraft for 31 days, you'd now pay £14.34 in interest. Using the same conditions, before the change you'd have paid £7.76 in interest plus the fee of £6, so it's going to cost you in the region of 50p more per month, I think.

January is long for a lot of people because they get paid earlier than usual in December

All the banks are putting overdraft rates around 40%. This is because it will shortly be illegal to charge for unarranged overdrafts, or to charge daily or monthly fees.

usual law of unintended, although highly predictable consequences.

the length of January is perfectly predictable. If this is tatmas overspend then the cure is in your hands.

There was quite a lot of press recently about these changes, I don't know a specific website to recommend but if you Google you should find all the info.

@Basilicaofthemind January is long for a lot of people because they get paid earlier than usual in December.

This is a common misconception. If you get paid earlier, you don’t need to spend it earlier. Most people transfer the pay into a second account until the date that their actual pay day should have been.

Thanks 🙏🏻

Luckily it’s usually only towards the end of January that’s the nightmare month and then it’s clear from February when we get paid again.