Justifying 35% interest charge on an overdraft

VergingOnTheRidiculous

hi
I was wondering how, in this day and age, Barclays can justify a 35% interest charge for using an arranged overdraft , just wondering!

[Deleted User]

Because it's designed for very short term borrowing. Anyone who uses it long term is a very high risk customer, hence the higher rate.

Also, of course, the ban on fees meant that a flat interest rate had to be brought in instead. Barclay set theirs lower than most.

JamoLew

It’s in line with the APR on most credit cards 

Its cheaper than the vast majority of pay day loans

Seems reasonable to me - if you don’t like the T&Cs then don’t use the product/company 

[Deleted User]

35% APR.
As an example, £500 into an arranged OD for 4 days costs you £1.64
OD fees were capped by FCA so not sure what you think is wrong here

2021BJ

They don't need to justify it. Just like Tesco don't need to justify how much they charge for a tin of beans, Mercedez doesn't have to justify how much they charge for an S-Class and your local pub (if it still exists) doesn't/won't need to justify how much it charges for a pint of lager.

If you don't like the price, don't buy the product (or use the service in this case.)  Pretty simple really.

Thrugelmir

To cover the costs of providing the facility.  On £500 that's only 47p for a day.  Not as dramatic as 35%. 

Humdinger1

Because they are in it purely for the money, not for the good of individuals or society overall.  Are you finding yourself using it a lot? It would be worth looking at your incoming and outgoings because as you suggest, this is a high interest rate and an overdraft can be called in at any moment.   Have a look at the debt free wannabe board as there's lots of good, non judgemental advice over there and people who have got out of some horrendous pits.  Humdinger 

VergingOnTheRidiculous

Thanks Humdinger1 for some good advice, I dropped into it for a short term and was surprised by the notification of the interest rate, I have my finances in pretty good shape (I have to say thanks a lot to Martin and his crew) but can I also thank you for not just accepting that that is the way it is and we should accept it, surely if Martin had been like that then an awful lot of his campaigns would not have got off the ground let alone be the roaring success that they have been and, not doubt, will continue to be.

zzyzx1221

VergingOnTheRidiculous said:

Thanks Humdinger1 for some good advice, I dropped into it for a short term and was surprised by the notification of the interest rate, I have my finances in pretty good shape (I have to say thanks a lot to Martin and his crew) but can I also thank you for not just accepting that that is the way it is and we should accept it, surely if Martin had been like that then an awful lot of his campaigns would not have got off the ground let alone be the roaring success that they have been and, not doubt, will continue to be.

You're free to not accept it, as many of us don't.

Don't use the service and you don't have the pay the charge.

helpyhelper

The FCA have messed up here. They insist arranged and unarranged overdrafts are charged at the same rate. The only result is that arranged overdrafts become much more expensive

Walker1

Honestly I don’t think it’s unreasonable.

your choice to use it or not.