A&L "interest free" overdraft

TrickyDicky

Ok, their current account has a 0% overdraft for 12 months, and is free. But I just noticed something a little bit sneaky. After 12 months apparently you keep your 0% overdraft, but they charge a 50p/day (max £5/month) "usage fee". This seems like a blatent attempt to keep a nice attractive headline 0% overdraft figure, while actually charging you for it. Are they not breaking some banking code, or are they just trying to get around the new, clearer boxes set out in the new banking code?

On a £100 overdraft it actually works out to a whopping 60% interest rate, but the more you go overdrawn, the less (in % terms) it costs you.

Is this the first instance of this?

Milarky

TrickyDicky wrote: »

Ok, their current account has a 0% overdraft for 12 months, and is free. But I just noticed something a little bit sneaky. After 12 months apparently you keep your 0% overdraft, but they charge a 50p/day (max £5/month) "usage fee". This seems like a blatent attempt to keep a nice attractive headline 0% overdraft figure, while actually charging you for it. Are they not breaking some banking code, or are they just trying to get around the new, clearer boxes set out in the new banking code?

No, they were quite entitled to introduce these changes - which are easy to understand for most customers and should save the less savvy quite a bit even if then end up paying £5 per month for the use of an otherwise free overdraft

On a £100 overdraft it actually works out to a whopping 60% interest rate, but the more you go overdrawn, the less (in % terms) it costs you.

Yes, but as a monthly 'fee' it's very reasonable (Oh dear, did I really say that? Methinks A&L will start to experiment and push out the number of days affected to capture more income after the 'trail period') Meanwhile, for those with £1000 overdraft (not unknown) it comes out at 6% - 'unbeatable'

Is this the first instance of this?

Think so. A&L do like to try out new products - although didn't Lloyds introduce a £10 x 3 days scheme much like this?

PROLIANT

50p per day for no more than £5 per month, not bad in my opinion, that is a maximum of 10 days @ 50p, so if you use O/D for 1 week that will cost you £3.50 if you use O/D for 1 Month that will cost you £5.00 irrespective of the O/D value.