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Has MSE caused my overdraft rate to increase by 24%? - Page 3

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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 4.1K views
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  • Voyager2002Voyager2002
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    DJMC wrote: »
    40 - 16 = 24
    An increase of 24%
    Or would you have preferred "twenty four percentage points"?

    :p


    The overdraft interest rate has increased by twenty-four percentage points, an increase of 150 per cent. Both statements are appropriate, and mean different things. Had the overdraft interest rate gone up by 24 per cent, it would now be slightly under 20 % pa, an increase of almost four percentage points.
  • FtbDreamingFtbDreaming
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    Ive done as the op and moved my savings account into my current account in order to get out of the overdraft pre April when my account changes comes into effect.

    I wont be one of these people but what about those that are almost maxed out on their overdraft then the interest charge takes them into unauthorised territory.... surely people are going to be left in serious poverty as I'm sure the banks wont be declining their own payments.

    I can just see a lot of people ending up in hot water over this and possibly defaulting on their accounts or moving their income over to other banks with no overdraft and only paying interest for years. Obviously not MSE users now but many users of the future will start popping up.
  • FtbDreamingFtbDreaming
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    And to follow up... I only have high interest credit cards due to previous poor history and not attempted to upgrade in 3 years.. but these will now be cheaper than the overdraft so for some people it may encourage more credit card use.
  • edited 15 January at 11:02AM
    MalkytheheedMalkytheheed
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    edited 15 January at 11:02AM
    yksi wrote: »
    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.

    This is not correct.
    Well managed credit is a good thing. Overdrafts (used or not) are not a good thing. Lenders prefer to not see them. At all.
  • tempus_fugittempus_fugit
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    DJMC wrote: »
    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.
    It’s not wiping out your savings, they had already been negated by having £8,000 in overdrafts. It’s important to always consider your finances as a whole and not just in parts.
    Retired at age 56 after having "light bulb moment" due to reading MSE and its forums. Have been converted to the "budget to zero" concept and use YNAB for all monthly budgeting and long term goals.

    Pedant point: There is no such word or construction as "I's", the word to use is "my".
  • getmore4lessgetmore4less
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    DJMC wrote: »

    But to me it represents wiping out my savings and makes me nervous.

    You can recreate your "savings" at any time by using your overdraft(s) again, which is what you were doing before.

    As long as they don't take your OD away nothing has changed you borrow money to pretend you have savings.

    Would be cheaper to run a 0% purchase card for cash flow management and a line of credit rather than an OD that charges interest.
    (which is what you were doing Budgeting is something different).
  • ThrugelmirThrugelmir
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    siborg wrote: »
    Overdrafts are designed for one thing, to make money for the bank.


    Do you think banks should operate as charities then? The charges levied have to cover the true cost of providing the facility.
    “Risk comes from not knowing what you are doing. – Warren Buffett”
  • DJMCDJMC
    63 posts
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    You can recreate your "savings" at any time by using your overdraft(s) again, which is what you were doing before.

    As long as they don't take your OD away nothing has changed you borrow money to pretend you have savings.

    Would be cheaper to run a 0% purchase card for cash flow management and a line of credit rather than an OD that charges interest.
    (which is what you were doing Budgeting is something different).
    Wrong.
    I cannot recreate my OD at 16%.
  • DJMCDJMC
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    born_again wrote: »
    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:

    As has been said, it was upped in November. I complained and NW replied I would have accepted the T&Cs online via a chck box, as per my previous post.
  • DJMCDJMC
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    My Nationwide VISA payment, around £6k - I pay it off monthly of course - went out today and NW sent me a text to warn me of the 39.9% overdraft rate unless I pay in funds (as I intend to) by midnight tonight.

    They've never done that before. Guilty conscience perhaps?

    Anyway... as they sent the text at 7.04am, and it woke me up, I've complained:

    "I was woken this morning at 7.04am by your text advising me I was about to utilise my arranged overdraft.
    I understand why you now warn of the extortionate rate charged for overdrafts, but 7.04am is not acceptable.
    You should not be contacting customers at unreasonable times. Please refer to FCA handbook S7.9.4.
    I will accept £100 in compensation on this occasion, for disturbing me at an unreasonable hour.
    I can forward a copy of the text if you require it.
    Many thanks."

    Go on... say "well, you could have switched your phone off overnight or disabled texts" and I'll reply a) THEY could have read the rule book and b) my father is at death's door in a nursing home so I keep phone, and texts, enabled. There, saved you from feeling bad eh? :)
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