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Has MSE caused my overdraft rate to increase by 24%?

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Has MSE caused my overdraft rate to increase by 24%?

edited 30 November -1 at 12:00AM in Budgeting & Bank Accounts
81 replies 4.2K views
DJMCDJMC Forumite
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edited 30 November -1 at 12:00AM in Budgeting & Bank Accounts
I found out in December that my authorised overdraft rate had increased in November to 40% from 16%.

We have two authorised overdrafts, £5k and £3k, and being self employed with varying income each month I didn't mind using the facility regularly to help with budgeting.

The other day I saw Martin Lewis on the TV clucking like a hen in front of a crowd asking them to applaud him for the success in bringing the banks to task over overdraft fees. I'm assuming his success and their gain is my loss?

I've now transferred my savings into my current accounts as a buffer against going overdrawn. Martin would say that makes much more sense - not paying 16% (or now 40%) and losing 1 or 2% in savings interest.

But to me it represents wiping out my savings and makes me nervous. That nervousness isn't worth the saving I'm making in not going overdrawn. Illogical? Perhaps. But I wish things had been left as they were.
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Replies

  • Willing2LearnWilling2Learn Forumite
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    It may not feel like it right now, but you should be a lot better off in the long run, as you will be learning to budget without an overdraft...

    :)
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    :smiley:
  • daveyjpdaveyjp Forumite
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    16% to 40% is a 150% increase, not 24%.
  • BoGoFBoGoF Forumite
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    Martin would love to take credit for it but the pressure to scrap fees has come from the FCA.

    Of course it makes sense to not pay any overdraft nterest when getting peanuts on savings.
  • born_againborn_again Forumite
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    I think ML is over hyping his status... After all he is only a journalist.

    He has made his money from this site in 2 ways.
    Pre selling it by all the referral kick backs he got for pushing people in certain accounts. I believe 6 figures a year had been mentioned.
    And actually selling it.

    It was the FCA that brought in the revamped regulations. Changing it back to what it used to be. After they had previously agreed a fixed fee was better.

    He does give some very good advice. And some not so good.
    Family is for life not just Christmas
  • Ben8282Ben8282
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    I also agree that it makes more sense.
    You have not wiped out your savings. The amount of money you actually have remains the same and you are not paying any overdraft charges. The overdraft ramsins there to use in an emergency. If you were to use it you would be in exactly the same position as if you had spent your savings.
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  • DJMCDJMC Forumite
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    daveyjp wrote: »
    16% to 40% is a 150% increase, not 24%.
    40 - 16 = 24
    An increase of 24%
    Or would you have preferred "twenty four percentage points"?

    :p
  • DJMCDJMC Forumite
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    Ben8282 wrote: »
    I also agree that it makes more sense.
    You have not wiped out your savings. The amount of money you actually have remains the same and you are not paying any overdraft charges. The overdraft ramsins there to use in an emergency. If you were to use it you would be in exactly the same position as if you had spent your savings.
    No.
    I would be paying 40% interest whereas my main gripe is that I used to pay 16%. Have the banks been forced to charge 40%? It seems like loads of folks in overdraft with no savings will now be fleeced and others "happy" to pay 16% will no longer be making the banks loads of money as they move savings to current accounts. Additionally, my way of thinking is that I now have less "cheap" cash so I draw in my horns and spend less thus adversely affecting the economy and growth.

    Additionally Nationwide did not notify me of the change of interest rate prior to it happening. They later claimed I had checked a T&C box on entering their website. This is possible, but every time I go to their site there's a box which appears asking me to click "continue". A clever ruse when customers get so hacked off with it they ignore it.

    "Ah well, you should always read everything in small print every time you do anything..." Yes, but life is short and important changes should be labelled "Important Change".
  • eskbankereskbanker Forumite
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    DJMC wrote: »
    Additionally Nationwide did not notify me of the change of interest rate prior to it happening. They later claimed I had checked a T&C box on entering their website. This is possible, but every time I go to their site there's a box which appears asking me to click "continue". A clever ruse when customers get so hacked off with it they ignore it.

    "Ah well, you should always read everything in small print every time you do anything..." Yes, but life is short and important changes should be labelled "Important Change".
    They emailed me in August, titled "Important information in your statement email", then "Your Current Account statement is here – along with some important changes" and
    Important information about changes to overdrafts

    From 11 November 2019, we’re changing the way we charge for overdrafts and the text alerts we send you. As these changes could affect you, it’s important to read through the Summary of Changes page carefully. Just click on the button below to read about the changes – and from there, you should download and save or print the document too.

    For now, here’s a quick overview:
    • Any borrowing with a new or existing arranged overdraft will be charged at an interest rate of 39.9% EAR/APR (variable).
    • We’re introducing new text alerts (by 18 December) to make it even easier for you to manage your money. You’ll automatically be opted in to these.
    • We’re removing unarranged overdraft charges. You can’t normally go into an unarranged overdraft, but if a situation arises where you do, we’ll no longer charge you for it.
    • We’re also making some changes to your Terms and Conditions.
  • Willing2LearnWilling2Learn Forumite
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    I think I am like the OP in that I have just read that email for the first time. It has been in my 'inbox' as an unread email, until just now. :D
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    :smiley:
  • yksiyksi Forumite
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    I'm struggling to understand why you're annoyed that your savings, which were not earning 16%, are now effectively saving you 16% compared with your situation before the change. Ben8282 already told you that you haven't wiped your savings out and you disagreed - but this doesn't fly. You were thousands in the hole with that overdraft, meaning that the true level of your savings was actually a lie. The only things you lost here was 1, the easy ability to waste money (no idea why you wanted to do that rather than stay out of the overdraft, but it's questionable management to say the least) and 2, a deceptively-high savings figure that belied the truth of your financial situation.

    The total amount is still available to you - if you really needed to, you could empty the current account and then keep going into the overdraft. But it would sting a lot more now, fair enough, and I can understand there's a period of mourning and adjusting to that more accurate savings level.
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