HSBC to increase overdraft rate to 39.9%
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capital0ne
Posts: 872 Forumite
HSBC has announced that customers who dip into the red will be charged a flat 39.9 per cent interest rate from next March.
It's not all bad news tho', the biggest winners under the changes are, unsurprisingly, those who often find themselves in their unarranged overdraft. The bank at the moment charges a £5 daily fee for every day you are in the red, capped at £80 a month.
That £5 fee will be scrapped from next year, with the cost of borrowing for all customers capped at £20 a month.
Presumably that's on top of the interest you'll pay!
Time to move on maybe?
Happy Holidays everyone
It's not all bad news tho', the biggest winners under the changes are, unsurprisingly, those who often find themselves in their unarranged overdraft. The bank at the moment charges a £5 daily fee for every day you are in the red, capped at £80 a month.
That £5 fee will be scrapped from next year, with the cost of borrowing for all customers capped at £20 a month.
Presumably that's on top of the interest you'll pay!
Time to move on maybe?
Happy Holidays everyone
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Comments
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time to move on, or time to exercise some financial discipline!0
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https://forums.moneysavingexpert.com/showthread.php?t=6079370
Move on where?
Nationwide, FD. Expect M&S soon to be followed by pretty much all other banks in the next few weeks.
I bet a good few will slip in over the period between Christmas & New Year given the 90 notice period.Life in the slow lane0 -
Well if peeps only spent money that they earned there is no reason to use an overdraft unless its an emergency.
If you can't sort it out in 3 months then you need to do some serious work on your finances - nobody in particular here - just a general comment.0 -
They could charge 99999999% if they wanted, doesn’t make a difference to me.
I’ve stumbled across a hidden secret in saving it seems. Purely accidental ... if I don’t have it, I don’t spend it.
I know some people think they MUST have that Friday takeaway like their life will end if they don’t. That they MUST have that bottle of wine to unwind after a hard week, that they MUST buy those cigarettes and that they deserve that 3 week around the world holiday after grafting so hard all year.
But it’s the evil banks we should point the finger at eh?0 -
Some of these comments are just appalling Ok, so you guys are content in your smug, self-righteous little no-overdraft worlds but this is really going to hit a lot of people who simply struggle to pay their bills.
Not because they are buying luxuries, but because it is physically impossible to make ends meet with the resources that they have. For these folk it is not a situation of their own making.
Putting the rate up to 40% is a disgusting thing to do. Other banks are already happily following along. The government first give a sh*t about this as usual.
The whole automatic unarranged overdraft is a scam method dreamed up after the banks were stopped from
charging hideously excessive fees.
If the banks wanted to they would find a way to implement technology so that cards would just stop working when the balance reached zero.
But really they just want to encourage as many people into debt as possible as it is their cash cow.0 -
TheOutlineKid wrote: »Some of these comments are just appalling Ok, so you guys are content in your smug, self-righteous little no-overdraft worlds but this is really going to hit a lot of people who simply struggle to pay their bills.
Not because they are buying luxuries, but because it is physically impossible to make ends meet with the resources that they have. For these folk it is not a situation of their own making.
Putting the rate up to 40% is a disgusting thing to do. Other banks are already happily following along. The government first give a sh*t about this as usual.
The whole automatic unarranged overdraft is a scam method dreamed up after the banks were stopped from
charging hideously excessive fees.
If the banks wanted to they would find a way to implement technology so that cards would just stop working when the balance reached zero.
But really they just want to encourage as many people into debt as possible as it is their cash cow.
Smug and self righteous!?
Surely not? mse forum?:)0 -
TheOutlineKid wrote: »Some of these comments are just appalling Ok, so you guys are content in your smug, self-righteous little no-overdraft worlds but this is really going to hit a lot of people who simply struggle to pay their bills.
Not because they are buying luxuries, but because it is physically impossible to make ends meet with the resources that they have. For these folk it is not a situation of their own making.
Putting the rate up to 40% is a disgusting thing to do. Other banks are already happily following along. The government first give a sh*t about this as usual.
The whole automatic unarranged overdraft is a scam method dreamed up after the banks were stopped from
charging hideously excessive fees.
If the banks wanted to they would find a way to implement technology so that cards would just stop working when the balance reached zero.
But really they just want to encourage as many people into debt as possible as it is their cash cow.
Actually its a relatively simple calculation for people to make. If you have a £100 overdraft facility and regularly use it all by the end of the month then it only benefits you once. You have an extra £100 to spend the first month and then after that you have exactly the same to spend as you would if you lived on your earnings - minus whatever the overdraft is costing. What people need to do is find that £100 somehow, pay it off and close it down. Then they'll be better off by the overdraft fees every month.
It's easier to say than do for many people however........
https://www.independent.co.uk/life-style/hsbc-overdraft-charge-fee-bank-interest-rate-a9234346.html0 -
That technology has been around for a long time and its use is getting wider.TheOutlineKid wrote: »If the banks wanted to they would find a way to implement technology so that cards would just stop working when the balance reached zero.
But really they just want to encourage as many people into debt as possible as it is their cash cow.
Basic bank accounts were introduced without overdraft facilities and the associated debit cards are configured for online authorisation only, as this is the only realistic way of controlling whether or not money is dispensed.
Other accounts can also have a 'control' facility added to achieve the same effect.
More recently, contactless cards have been set up to authorise online too, which allows this control to be applied more widely, rather than authorising contactless transactions offline, which obviously prevents the bank from being able to stop accounts going overdrawn.
Nationwide's prior announcement of their overdraft rate increase was accompanied by a policy statement that they're going to decline transactions that would take customers into unarranged overdraft, and my suspicion is that they won't be alone in doing this.
So, I believe that use of unarranged overdraft facilities will actually start to decrease - your opinion (that these are a cash cow) isn't an uncommon one but of course many such overdrafts aren't ever repaid, so loaning people money in this way isn't an entirely one-way street.
Finally, many people actually find it useful for transactions to be authorised even if it takes them overdrawn, although granted this is more likely to be those who use overdrafts as intended, i.e. a short term temporary cashflow mechanism, rather than a long term loan.0 -
Frequently I come here and nobody sympathises with my situation so why should I sympathise with anyone else’s? My situations are frequently used to mock but when the shoe is on the other foot....?!!
Anyway, I’ve worked with numerous people over the years who have ‘struggled to make ends meet’ through ‘no fault of their own’ yet I see them every single day going to a local bakery and buying this, that & the other for morning break and dinner which adds up very quickly. Getting numerous coffees from the vending machine each day instead of buying a jar of instant for a fraction of the cost.
But they tell me they’re doing ‘all they can’.
Obviously not everyone is like this, there’ll be people who really are struggling and are doing absolutely everything possible but in my experience most people do not do ‘all they can’.0 -
TheOutlineKid wrote: »Some of these comments are just appalling Ok, so you guys are content in your smug, self-righteous little no-overdraft worlds but this is really going to hit a lot of people who simply struggle to pay their bills.
Not because they are buying luxuries, but because it is physically impossible to make ends meet with the resources that they have. For these folk it is not a situation of their own making.
Putting the rate up to 40% is a disgusting thing to do. Other banks are already happily following along. The government first give a sh*t about this as usual.
The whole automatic unarranged overdraft is a scam method dreamed up after the banks were stopped from
charging hideously excessive fees.
If the banks wanted to they would find a way to implement technology so that cards would just stop working when the balance reached zero.
But really they just want to encourage as many people into debt as possible as it is their cash cow.
Didnt they previously charge a flat rate £5 a day? I know some banks currently do. This is a lot more than 40% on small balances.
And in vast majority of cases i doubt it is a case of it being physically impossible to get by without using overdraft.0
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