Why have these changes to overdrafts been made now?
These changes are being made for two reasons:
1.) To make it easier for customers to compare interest rates between providers, and as a result, drive competition between banks
2.) To get rid of very high fees for those who exceed their overdraft limit. These fees have for a long time been seen as unfairly impacting those in the most need. It’s hoped that getting rid of these fees will prevent some people from falling into problem debt as a result.
How much will my new overdraft interest rate be?
Most lenders have announced their their new interest rates for overdrafts, and most of these rates overdrafts are approximately 40%.
These are the new charges that are now in effect:
Provider
|
Previous interest rate
|
New interest rate
|
HSBC
|
19.9%
|
39.9%
|
Nationwide
|
50p/day
|
39.9%
|
First Direct
|
15.9%
|
39.9%
|
M&S Bank
|
15.9%
|
39.9%
|
Barclays
|
75p/day
|
34.9%
|
NatWest
|
14.9 - 19.9%
|
39.49%
|
RBS
|
19.9% and £6/month
|
39.9%
|
Santander
|
£1-3/day
|
39.9%
|
Lloyds
|
1p per £6 / day
|
39.9%
|
TSB
|
19.8%
|
39.9%
|
Starling
|
15%
|
15-35%
|
Monzo
|
50p/day
|
19-39%
|
Halifax
|
1p per £6 / day
|
39.9%
|