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

born_again

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. .

I think you will find that they will have sent a variation of terms & conditions a while ago to cover the change in policy they have been forced to bring in.
Every bank I'm with have.
Also Nationwide were one of the 1st to announce the interest rate. So received a lot of publicity.

You have also missed that the change does not come in till 06/04/2020....
So you have admitted yourself that you know in advance of the change :rotfl:

colsten

DJMC wrote: »

No.
I would be paying 40% interest whereas my main gripe is that I used to pay 16%.

I understand you are are horrified by that huge jump. Everybody should be. But why were you happy paying 16% for an overdraft when you had savings, for which you got (at a guess) less than 3%? Does not compute.

Elisheba

Is this every OD then? Blimey, I'm going to have to check through my bank emails as well. I don't remember seeing anything from Barclays.

eskbanker

born_again wrote: »

You have also missed that the change does not come in till 06/04/2020....
So you have admitted yourself that you know in advance of the change :rotfl:

No, OP is right about the date - as per the email I quoted above, the change was effective from 11 November 2019, hence the notifications being issued in August.

April is the deadline by which changes must be implemented but there was nothing stopping banks (or building societies!) introducing them before then, and right on cue....

Elisheba wrote: »

Is this every OD then? Blimey, I'm going to have to check through my bank emails as well. I don't remember seeing anything from Barclays.

Barclays announced a new rate of 35% last week, effective from 22 March:

https://www.moneysavingexpert.com/news/2020/01/barclays-announces-overdraft-shake-up-with-interest-rates-of-35-/

hoc

born_again wrote: »

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.

ITV in general over hypes Martin. While his repetitive approach on basics like credit card debt and utility bills is good for the financially ignorant, his simplistic set of advice is increasingly showing its limitations. On a recent TV programme, his advice for a multi-thousand pound long term investment for a baby was a savings account! Not actually investing.


This particularly change has brought transparency at a cost. For most the previous schemes of convoluted combinations of various penalty fees and overdraft rates were cheaper than a single rate. It will only be a positive change if it leads to banks competing to reduce or those in debt becoming more aware. I find both unrealistic. Nevertheless, no Martin or MSE didn't do this. As much as Martin takes credit for "raising issues" his influence is in reality limited to raising awareness to the public, these changes are the result of various bodies and committees.

Malkytheheed

Having both savings and an interest bearing overdraft is frankly, ridiculous.

siborg

Overdrafts are designed for one thing, to make money for the bank.


You are better off not having an overdraft in the first place, ask your bank to remove it from your account and then do not fall below £0.00 balance.

yksi

siborg wrote: »

Overdrafts are designed for one thing, to make money for the bank.

You are better off not having an overdraft in the first place, ask your bank to remove it from your account and then do not fall below £0.00 balance.

This can impact a credit history. If I had an overdraft and was able to avoid using it, I would definitely not remove it from my account. It shows I'm able to manage available credit responsibly.

Rosie1957

This is just a general question - now the interest on arranged an unarranged overdrafts is the same, what is the advantage of an arranged overdraft?

eskbanker

Rosie1957 wrote: »

This is just a general question - now the interest on arranged an unarranged overdrafts is the same, what is the advantage of an arranged overdraft?

The advantage is that you know you have access to those earmarked funds, whereas without an arrangement being in place, you're at their mercy as to whether or not they'll honour transactions that would take you overdrawn.

In this particular example of Nationwide, they've explicitly made it clear that, where practical, they'll decline attempted transactions that would take customers into unarranged overdrafts, as they're doing away with them:

No more unarranged overdrafts from 11 November

From 11 November, we’re removing unarranged overdrafts. This means you will not usually be able to spend over your arranged overdraft limit. And if you don’t have an arranged overdraft, then we’ll try to stop you from falling below a £0 balance. There are some cases where we can’t stop a transaction and you may go into an unarranged overdraft. That’s because they’re not charged at the same time that the payment takes place. If you go into an unarranged overdraft, you’ll only pay interest up to your arranged overdraft limit.

It's unclear at this stage whether other banks will also take measures to prevent accounts becoming overdrawn without arrangement, but I'm not aware of any others making the same sort of explicit commitment that Nationwide have.

Having said all that, even arranged overdrafts can be withdrawn at any time, albeit this is the exception rather than the rule and would be done with formal notification to the customer....