Nationwide will be 39.9% APR on overdrafts - should I switch?

nicetomeetyou

Nationwide has now announced its new rate. From 11 November 2019, if you've a FlexDirect, FlexPlus or FlexAccount, you'll be charged a flat rate of 39.9% APR

This from 18 APR..

[Deleted User]

Other banks will shortly follow suit I’m sure

mrmajika

New rules coming into force soon (April 2019 ish?) mean that banks cannot charge different rates for authorised and "unauthorised" overdraft borrowing. The net effect of this is likely to be that all banks push up their overdraft rates across the board.

As Gary (above) says, other banks are likely to follow suit soon enough.

SnowTiger

nicetomeetyou wrote: »

Nationwide has now announced its new rate. From 11 November 2019, if you've a FlexDirect, FlexPlus or FlexAccount, you'll be charged a flat rate of 39.9% APR

This from 18 APR..

Overdrafts from all banks are likely to become less attractive during the coming months.

https://www.moneysavingexpert.com/news/2019/06/fca-overdraft-reforms/:

An unarranged overdraft – one you haven't agreed with your bank before you use it – will no longer be able to cost more than an arranged overdraft under the new rules, and banks won't be able to charge you just for having an overdraft.

The price of each overdraft will be a single interest rate, rather than fixed fees of a certain amount per day or month. This price must be advertised using an annual percentage rate (APR) to help consumers compare costs across different accounts. The overdraft price rules will come into force on 6 April 2020.

The Financial Conduct Authority (FCA) also says banks must do more to identify customers in financial difficulty and help them reduce overdraft use, starting from this December.

[...]

Martin Lewis, founder of MoneySavingExpert.com, said: "It's taken a decade but this announcement by the FCA seems to finally mean the end to unfair bank charges for going beyond your overdraft limit.

badger09

mrmajika wrote: »

New rules coming into force soon (April 2019 ish?) mean that banks cannot charge different rates for authorised and "unauthorised" overdraft borrowing. The net effect of this is likely to be that all banks push up their overdraft rates across the board.

As Gary (above) says, other banks are likely to follow suit soon enough.

We're already in August 2019;)

IvanDP

The most annoying thing is that now people who can manage money are being penalised in favour of those who can't.

[Deleted User]

IvanDP wrote: »

The most annoying thing is that now people who can manage money are being penalised in favour of those who can't.

How so...?

Kentish_Dave

!!! wrote: »

How so...?

Because authorised and unauthorised overdrafts are charged at the same rate.

IvanDP

!!! wrote: »

How so...?

Those with an authorised overdraft have had to go through a credit check to be granted said authorisation.
The banks must have deemed then creditworthy to give them the overdraft in the first place.
Now, with everyone being grouped together, and those who are in good standing with their banks are being penalised in favour of those who are not.
I'm not trying to provoke an argument, it's just my opinion.

Keep_pedalling

On the face of it it would appear that there is no reason to bother with an authorised OD any longer but will banks now take a harder line on unauthorised ODs and bounce more payments that would take you into that zone?

[Deleted User]

Any overdraft, authorised or not, is a bad thing to use.

Just my opinion too.