..to warn you that new overdraft charges are coming in April

[Hagbeth]

If you didn’t know about this, now is the time to act.

“ Those affected will be charged an annual equivalent of either 19 per cent, 29 per cent or 39 per cent - and those with lower credit scores will pay the higher rate.”

inews.co.uk/inews-lifestyle/money/overdraft-charges-changes-new-rules-explained-nationwide-hsbc-santander-customers-today-1344208

I found this info from Martin Lewis easy to understand and the links very helpful...and yup got a letter from my bank telling me this was happening www.moneysavingexpert.com/news/2020/01/tsb-to-follow-other-banks-and-raise-overdraft-rate-to-39-9-/

And that’s why I’ll be going on a debt management plan or going bankrupt. Yet another policy to keep poor people poor. Insidious social engineering.

Yet another policy to keep poor people poor.

It's supposed to be the exact opposite. At the moment the banks make their profit by penalising the poor or disorganised with charges for being overdrawn that bear no relation to the cost to the bank. The rich/organised are effectively being subsidised, as we get free banking, a service made profitable by the charges others pay.

These high interest rates are a replacement for charges that banks are no longer allowed to make.

That’s interesting. Explains why I got an email from Nationwide telling me how much my overdraft cost me last year and asking me to call them to discuss ‘options’ to better manage it.

I was actually quite impressed by the email - it pointed out my overdraft cost me over 300 quid last year which is so stupid as I don’t even need an overdraft, I just got used to be in it during my student days.

Oops Natwest, not Nationwide!

I notice that in the example in the link, TSB customers who are overdrawn by up to £1410 will be better off despite the interest rate doubling.

I don't really understand this. My interest rate will be going up to 39.9% according to Natwest and I have an overdraft of £2500 so I'm probably going be worse off according to that article.

Agreed. Didn't realise this. We bank with nationwide.

HSBC has already brought this in.

Do charges to an overdraft facility only apply if you use your overdraft? I have a £3000 overdraft facility on my current account (from my student days) but I don’t ever use it. Will I still have to pay for the privilege of having an overdraft available?

So they are raising all overdraft fees to be the same as the extortionate fees if you go over your limit? That's bad.

I'm confused too. I have a high overdraft limit left over from my student days but I never use it. Will these changes affect me at all?

You’ll only pay if you’re borrowing, not if you have a facility and don’t use it.

Yet again the majority are being penalised for the few feckless. Seems unfair

Your bank should write to you.

With a few rare exceptions, you won't be charged just for having an overdraft limit, only when you borrow using it.

The changes mean a switch from sometimes-complicated systems of fixed fees, to interest charged in direct proportion to how much you borrow and for how long.

In general people overdrawn much less than £1000 benefit from this, whereas those overdrawn by much more are hurt by it. Though it varies by the bank and your account terms.

For example with Barclays, under the current system being overdrawn by £50 for 7 days would cost £5.25; being overdrawn by £999 for the same 7 days would also cost £5.25! Under the new system that £50 over 7 days would cost 28 pence, while the £999 would be £5.75.

Far from "the majority being penalised for the feckless", it's actually those trapped in very large overdrafts who are hardest hit. And those are the people who are potentially least able to move the debt somewhere else.

My bank wrote and said interest will be 39.49%

Which is ridiculous

Does that mean they think I have a poor credit score?

Piglet, mine said the same. I don't think so, some accounts are just using the highest. I have a basic NatWest account.

Knowledge is power. I'm hoping to move my overdraft to a 0% credit card.

I need to look into this further. I'm already trying to pay mine down, but dont think I'll get there by April. Thanks for bringing the subject up, OP.

We are with First direct and they are bringing these changes in from April. We are going to get ours cleared off in next couple of months. First £250 of their overdraft is free so at least we will have a buffer if we need it

Nationwide are already doing this. I was expecting it back in November but they only just increased my overdraft costs this month.

never gone over my overdraft limit but it seems to be there to "help" those people that go into an unauthorised overdraft as they can't charge people for this anymore so need to reap in their money somehow.

More tightening of my already tight belt. Makes me wonder how many people this will push over the edge

I have an account with a fee from Lloyd's. My overdraft is 500. My fees are 27. I'm in my overdraft every month. Will I be charged more than my account fee? Or is it only if you go over your overdraft if you see what I mean.

Does that mean they think I have a poor credit score?

No. Overdraft interest rates have to be the same for everyone with the bank (more or less).

Considering that just under 40% is so common, I suspect there's a rate cap, though that's not confirmed. It's always the case that if a government imposes a price cap on something, most companies go straight to the cap. These overdraft changes clearly do mean less competition.

@DobbyLovesSocks

My bank says they have removed the buffer

THe FCA information
www.fca.org.uk/news/press-releases/new-overdraft-rules-mean

The FCA data sheet
www.fca.org.uk/data/changes-overdraft-charges

You cannot be charged for an overdraft you are not using

you will no longer be charged fees for using an overdraft, only interest
eg the £10 a day for a 12p overdraft is gone

Authorised and unauthorised overdrafts will narrow
unauthorised overdrafts will become MUCH cheaper

banks will have less of an incentive to keep people poor

same as the FCA and the FSCS telling people to pay card debts by standing order not direct debit now ....

They're definitely already here. I had a text message from my bank last weekend to let me know I'd gone overdrawn by a few pounds, and the APR was something like 39.9%. I haven't been using the overdraft facility so I'd filed the notification they sent out without really taking much notice.