New Overdraft terms and conditions

shedboy52

Just been notified by Barclays and NatWest that the changes to the T&C's on overdraft will result in interest being charged at 35% and 39% respectively. WOW.....banks are more expensive than loan sharks (possibly will break legs as well).

Their comparisons of typical charges under the existing and new schemes all indicate charges will reduce marginally!!!

Not sure about that but if true just goes to evidence how much the banks want to profit out of small levels of overdrafts that Joe Public have.

Dont expect overdraft interest rates on business lending is anywhere near these levels

A_Lert

This is something Martin Lewis campaigned for. Well, he campaigned for the removal of fixed fees, but any fool could predict that if fixed fees were removed interest rates would rise to compensate.

colsten

You have a choice. It is not mandatory to use overdrafts.

However, in almost all cases it is absolutely true that the new %age-based charges will be lower than they used to be for unarranged overdrafts.

Where it hits badly, is with arranged overdrafts. If people need to borrow, they should look at loans, not at overdrafts.

Bottom line: I applaud the new rules. Hopefully it's a wake-up call for people to do everything possible to get rid of their overdrafts.

Thrugelmir

shedboy52 wrote: »

Not sure about that but if true just goes to evidence how much the banks want to profit out of small levels of overdrafts that Joe Public have.

Management of accounts is a costly and time consuming exercise. If you don't want to pay the charges manage your personal finances better. Using an overdraft facility is a matter of choice.

sal_III

You got it wrong, this is not a "scheme" to enrich the banks. The changes were not initiated by the banks for profit, but by the regulators. And sine the regulators want universal conditions for both arranged and un-arranged overdrafts everyone is getting what is acceptable for un-arranged overdrafts - interest rates comparable to a credit builder CC.

The end result is that most of the people with un-arranged OD will be better off, while everyone with an arranged OD will be worse off - blame the nanny state, not the banks.

Everyone is getting ample warning to shift their debt to a better place.

FtbDreaming

Im almost out of my overdraft since finding about the new interest although if I'm perfectly honest I don't even know what the interest is prior to the changes.

It seems crazy that its cheaper to use a credit card than an overdraft... i think it'll boost the credit card market more: i got mine as a 0% student overdraft about 15 years ago. To be honest it’ll be nice to get rid of it altogether after all these years.

born_again

sal_III wrote: »

The changes were not initiated by the banks for profit, but by the regulators. And sine the regulators want universal conditions for both arranged and un-arranged overdrafts everyone is getting what is acceptable for un-arranged overdrafts

Mmm.
The regulator had the right to set a limit on the % rate charged. But they felt that they would leave it to the banks to set a fair rate. If the regulator feels that they are unfair they can make them reduce them.

Banks have not set their rates to run at a loss...:rotfl:
They are going to be losing a lot of income with this change. Hence why some banks are going back to stopping any payments that take people over their limit.
So there are going to be a lot of unhappy customers that will see more charges, just not from the banks. When the DD's start bouncing.

JuicyJesus

This is a minor point, but loan sharks tend to be rather more expensive than 39% APR, and a fair bit less friendly. Try not paying back one of them and squinnying about interest, you would probably change your tune before you could say "wait what do you mean I can't complain to the ombudsman about Big Barry The Lending Ba*tard?"

Thrugelmir

FtbDreaming wrote: »

It seems crazy that its cheaper to use a credit card than an overdraft...

Card issuers pick up fees from the transactional activity. You are paying this cost within the selling price of the goods or services, i.e. the mark up. No such thing as a free lunch.

born_again

FtbDreaming wrote: »

It seems crazy that its cheaper to use a credit card than an overdraft...

But do you realise that it was cheaper to get a payday loan from Wonga for 30 days than it was to have a £100 debt with Halifax at one point.
Yet regulator clamped down on them and forced them to show a APR, when no one had a loan for that long...

The regulator likes to think they are working to give Joe Public the best deal.... Shame no one believes that.:rotfl:

FtbDreaming

. But do you realise that it was cheaper to get a payday loan from Wonga for 30 days than it was to have a £100 debt with Halifax at one point.
Yet regulator clamped down on them and forced them to show a APR, when no one had a loan for that long...

The regulator likes to think they are working to give Joe Public the best deal.... Shame no one believes that.

No I didn’t know that... I've never got a payday loan though and hopefully once the overdraft is paid this Friday ill just have the credit cards for purchases such as flights and holidays so i get the cover on them.

Ive learnt my lesson about credit over the years and tend to only spend what i have anyway.