Nationwide Overdrafts

A4445

I have a Nationwide current account. It came with an overdraft I haven’t ever used.

I’ve noticed on their website they are now charging 40% interest. That’s shockingly bad that’s as bad as a Vanquis credit card.

I think this is shocking are they just encouraging people not to be overdrawn or cashing in on customers?

Thrugelmir

A4445 wrote: »

I think this is shocking are they just encouraging people not to be overdrawn or cashing in on customers?

Reflects the true cost to the NW of providing an overdraft facility. With the changing regulations lenders have to provide transparent charging structures. The Nationwide offer alternative means of borrowing that maybe better suited.

Ben8282

I agree that its a high interest rate but overdrafts are not intended for long term borrowing. If the overdraft was used only for a short time it wouldn't be that bad.

bigadaj

Thrugelmir wrote: »

Reflects the true cost to the NW of providing an overdraft facility. With the changing regulations lenders have to provide transparent charging structures. The Nationwide offer alternative means of borrowing that maybe better suited.

Depends on how you calculate true cost, I wouldn't trust a banks calculation if I was paying it.

We know that this has come about through an attempt by the regulator to achieve more transparent charges, and removing the fixed fee element charged by many banks.

I downgraded my flexplus to a flexdirect last week, had to be done by phone and the adviser read the script including the overdraft rate, I commented that it was a bit embarrassing to have to say that but didn't get any response, they're just doing their job I suppose.

Nationwide now seems to be struggling to justify its existence, no different to many banks, huge executive pay with little regard for members, until recently they did seem different but sadly no longer.

cloud_dog

Whilst I can't comment on the level of the overdraft rate, hasn't all this come about due to the Government review and removal of fixed cost overdraft charges, and the drive to dissuade people from using/going overdrawn?

As far as I was aware NW used to charge 50p per day whilst overdrawn within the agreed limit, which I was perfectly happy with.

eskbanker

cloud_dog wrote: »

Whilst I can't comment on the level of the overdraft rate, hasn't all this come about due to the Government review and removal of fixed cost overdraft charges, and the drive to dissuade people from using/going overdrawn?

As far as I was aware NW used to charge 50p per day whilst overdrawn within the agreed limit, which I was perfectly happy with.

Yes, when they announced this back in August, it was indeed clear that it was to align them with the FCA's steer on restructuring overdraft charging, as discussed in a thread featuring a poster who got rather worked up about it and lost the plot: https://forums.moneysavingexpert.com/discussion/6034548/nationwide-bs-how-about-40-ear-apr-overdraft-charges

I must admit that I was expecting more of their competitors to follow suit sooner but it would appear that most are hanging fire until closer to the April deadline....

System

eskbanker wrote: »

Yes, when they announced this back in August, it was indeed clear that it was to align them with the FCA's steer on restructuring overdraft charging, as discussed in a thread featuring a poster who got rather worked up about it and lost the plot: https://forums.moneysavingexpert.com/discussion/6034548/nationwide-bs-how-about-40-ear-apr-overdraft-charges

I must admit that I was expecting more of their competitors to follow suit sooner but it would appear that most are hanging fire until closer to the April deadline....

I've converted to FlexDirect but I have a feeling that their headline rate will be revised downward.

Starling, Metro and M&S Bank are all around the 15%/16% AER.
RBS/NatWest can offer overdraft control free of charge.