FCA say that new overdraft rules mean 7 out of 10 people will be better off or see no change

Willing2Learn

Source: https://www.fca.org.uk/news/press-releases/new-overdraft-rules-mean

Across the market, 7 out of 10 overdraft users will be better off or see no change, when new rules on overdrafts, introduced by the Financial Conduct Authority (FCA), come into force in April.

Around 14 million people use an unarranged overdraft each year, and all of these users will be better off or see no change. The FCA’s work highlighted that unarranged overdraft prices were regularly 10 times - and for some consumers as much as 20 times - as high as for payday loans. Customers at some large banks were charged effective arranged overdraft rates in excess of 80% per year once fees and charges are factored in.

born_again

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Maths add u nicely to me

A_Lert

A concern I have is the 3 in 10 who are worse off are likely to be those least able to withstand it. People with large arranged overdrafts face significantly higher monthly interest charges. In my opinion these are likely to be people with little other access to credit and little ability to pay more - or they would have already cleared the overdraft.

masonic

No doubt it's 6.9 out of 10 no fees therefore no change, 0.1 out of 10 better off, 3 out of 10 worse off. Damn lies and statistics.

Willing2Learn

masonic wrote: »

No doubt it's 6.9 out of 10 no fees therefore no change, 0.1 out of 10 better off, 3 out of 10 worse off. Damn lies and statistics.

The FCA have also produced an interactive table that shows estimated changes in overdraft costs for a range of typical arranged and unarranged borrowing scenarios at some of the biggest banks and building societies. Click below to see the table
https://www.fca.org.uk/data/changes-overdraft-charges

masonic

Willing2Learn wrote: »

The FCA have also produced an interactive table that shows estimated changes in overdraft costs for a range of typical arranged and unarranged borrowing scenarios at some of the biggest banks and building societies. Click below to see the table
https://www.fca.org.uk/data/changes-overdraft-charges

I did see that, however it doesn't help differentiate the 7 out of 10 figure into the proportion who don't use their overdrafts vs the proportion that do who will be no worse off.

Willing2Learn

I'm just hoping that the new rules help to reduce the numbers of people who have ended up using their overdraft, either for extended periods or continually. Personally, I consider that type of overdraft usage as a misuse of the facility...

masonic

Willing2Learn wrote: »

I'm just hoping that the new rules help to reduce the numbers of people who have ended up using their overdraft, either for extended periods or continually. Personally, I consider that type of overdraft usage as a misuse of the facility...

Indeed, it certainly levels the playing field and will help people compare overdraft usage with credit card borrowing, personal loans etc.