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First Direct follows HSBC in hiking overdraft fees from March - MSE News

Former_MSE_Naomi
Posts: 519 Forumite



First Direct customers have been told their arranged overdraft interest rates will be more than doubled to 39.9% from next year, a day after parent bank HSBC revealed similar plans...
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'First Direct follows HSBC in hiking overdraft fees from March'

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'First Direct follows HSBC in hiking overdraft fees from March'

Click reply below to discuss. If you haven’t already, join the forum to reply.
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Comments
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But FD is keeping £250 interest-free arranged overdraft at least, which many people have.0
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So for those who want to use an authorised overdraft it’s a significantly worse deal and may actually be better with a unauthorised one due to the £20 maximum!0
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I wonder if this swingeing overdraft interest rate anticipates an initial rush of bad-debt provision as some borrowers start to realise that they have nowhere to go.
Methinks StepChange and the like could be quite busy in the new year. Now might be a good time for those who are going to be in financial difficulty to start the ball rolling.Warning: In the kingdom of the blind, the one-eyed man is king.
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Any suggestions on what my options are for changing banks because of this? I have a very large overdraft with First Direct that I use all the time. This is more of timing and cash flow thing and because I don't like moving money around when I know money is coming in a week or so. Mentally I also don't like having a large balance in my current account. It's a pity as First Direct are very good otherwise I feel this is just taking the mickey though.0
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Any suggestions on what my options are for changing banks because of this? I have a very large overdraft with First Direct that I use all the time. This is more of timing and cash flow thing and because I don't like moving money around when I know money is coming in a week or so. Mentally I also don't like having a large balance in my current account. It's a pity as First Direct are very good otherwise I feel this is just taking the mickey though.
Loan interest rates are at historical lows at the moment so you might consider paying off the overdraft using a loan.
If your credit rating is reasonable you could go for a money transfer of the overdraft onto a new credit card. There are zero-% interest cards available to new customers. There is often around 4%-5% money transfer charge up-front.
You might even consider a 'zero-% on-purchases' credit card which you could use for your everyday spending instead of from your current account. It will take longer to clear the overdraft this way but it should reduce month by month until cleared.
In the end, the overdraft will have to be repaid so you will need to budget to repay over the duration of any deal you opt for.
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Changing banks will probably be pointless in terms of current account overdraft charges. It seems likely that those banks who haven't yet declared their overdraft charges for next year will opt for the same 40% interest.Warning: In the kingdom of the blind, the one-eyed man is king.
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To be clear I use my over draft as short term borrowing. I only go into my overdraft for a maximum of two weeks normally shorter but I go into it fairly regularly. When I am asking for alternatives I mean other current accounts.0
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Can you get out of that short term debt cycle? It's costing quite a lot in fees and interest.
Move DDs to fit in when salaries are received?
I'd much prefer to do this and move money around if it saves £5 a month in interest0 -
To be clear I use my over draft as short term borrowing. I only go into my overdraft for a maximum of two weeks normally shorter but I go into it fairly regularly. When I am asking for alternatives I mean other current accounts.Any suggestions on what my options are for changing banks because of this? I have a very large overdraft with First Direct that I use all the time. This is more of timing and cash flow thing and because I don't like moving money around when I know money is coming in a week or so. Mentally I also don't like having a large balance in my current account. It's a pity as First Direct are very good otherwise I feel this is just taking the mickey though.
A day or so I could understand, but weeks?
As I see it you have three choices:- Pay the 40% interest for convenience.
- Keep sufficient in your current account to avoid the overdraft.
- move money around to avoid the overdraft AND avoid having a high balance. Could you do most of this with standing orders?
Since you like First Direct, stay with them.Eco Miser
Saving money for well over half a century0 -
To be clear I use my over draft as short term borrowing. I only go into my overdraft for a maximum of two weeks normally shorter but I go into it fairly regularly. When I am asking for alternatives I mean other current accounts.
There won't be...
ALL banks will be charging interest rates around the same.
If you have savings available then just move enough across to ensure you do not exceed the £250 limit.
Also remember it is a max charge of £20 a month. So you would have to be earning a fantastic interest rate to make more than that.Life in the slow lane0
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