HSBC to hike overdraft fees from March

hounslowfish wrote: »

There’s one aspect of this change that baffles me.

Interest is capped for unarranged oberdrafts but not for arranged overdrafts. So having an arranged overdraft is now more expensive than having an unarranged??! What is then the motivation for arranging an overdraft?

As someone with an arranged overdraft of £750 which I do sometimes use, would I save money by asking the bank to remove it so I benefit from the unarranged cap?

Interest isn't capped, the fees for using an unarranged overdraft are capped at £20 per month. You will still be charged interest at 39.9% on either arranged or unarranged overdrafts. Racking up an unarranged overdraft of £750 would probably see you without a bank account sooner rather than later.

This really is a huge cultural change. Ever since I was a student banks have said here’s a cheap overdraft, please use it! I stopped using credit cards entirely because the overdraft sufficed for me to absorb unexpected short term overspending. I’m sad if this will push me back to credit cards.

Consumerist wrote: »

The FEES for using an unarranged overdraft are not capped. Paid- and unpaid-transaction fees will be charged on top of interest. Only interest on the unauthorised overdraft is capped at £20 pm.

The only limit on the fees charged is the Monthly Maximum Charge (MMC). The banks must publish this MMC.

PLEASE READ

"In light of this, HSBC is scrapping its £5 daily usage fee for unarranged overdrafts and reducing the maximum monthly cost for using one to £20"

The above relates to UNARRANGED overdrafts.

If you have an ARRANGED overdraft the interest rate for using that will be 39.9% (after the £25 interest free amount) This interest IS NOT CAPPED.

Thrugelmir wrote: »

Everybody starts with the intention of using their credit card sensibly. Then life gets in the way. Little by little. Debt increases. Maintaining financial discipline is a life skill. As a nation we are poor savers. Access to credit is the easier way out.

I do take your point. There is far too much personal debt in the system. I did, however, mention discipline and sensible use.

I remember the time - quite a few years ago now - when many of us were spending on 0%-interest credit cards to put spare cash into savings accounts for 2 - 3 years.

Even today, we use a credit card for everyday spending and then pay it off every month with a single payment from the bank. We have never paid any overdraft fees or interest and our savings benefit from the cash owing on the credit card until it is due for payment.

To say that there is no place for credit cards is to ignore their benefits - when used properly.