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  • FIRST POST
    • DJMC
    • By DJMC 14th Jan 20, 6:19 PM
    • 63Posts
    • 81Thanks
    DJMC
    Has MSE caused my overdraft rate to increase by 24%?
    • #1
    • 14th Jan 20, 6:19 PM
    Has MSE caused my overdraft rate to increase by 24%? 14th Jan 20 at 6:19 PM
    I found out in December that my authorised overdraft rate had increased in November to 40% from 16%.

    We have two authorised overdrafts, £5k and £3k, and being self employed with varying income each month I didn't mind using the facility regularly to help with budgeting.

    The other day I saw Martin Lewis on the TV clucking like a hen in front of a crowd asking them to applaud him for the success in bringing the banks to task over overdraft fees. I'm assuming his success and their gain is my loss?

    I've now transferred my savings into my current accounts as a buffer against going overdrawn. Martin would say that makes much more sense - not paying 16% (or now 40%) and losing 1 or 2% in savings interest.

    But to me it represents wiping out my savings and makes me nervous. That nervousness isn't worth the saving I'm making in not going overdrawn. Illogical? Perhaps. But I wish things had been left as they were.
Page 1
    • Willing2Learn
    • By Willing2Learn 14th Jan 20, 6:22 PM
    • 5,199 Posts
    • 4,840 Thanks
    Willing2Learn
    • #2
    • 14th Jan 20, 6:22 PM
    • #2
    • 14th Jan 20, 6:22 PM
    It may not feel like it right now, but you should be a lot better off in the long run, as you will be learning to budget without an overdraft...

    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    • daveyjp
    • By daveyjp 14th Jan 20, 6:23 PM
    • 8,605 Posts
    • 7,220 Thanks
    daveyjp
    • #3
    • 14th Jan 20, 6:23 PM
    • #3
    • 14th Jan 20, 6:23 PM
    16% to 40% is a 150% increase, not 24%.
    • BoGoF
    • By BoGoF 14th Jan 20, 6:24 PM
    • 5,912 Posts
    • 5,989 Thanks
    BoGoF
    • #4
    • 14th Jan 20, 6:24 PM
    • #4
    • 14th Jan 20, 6:24 PM
    Martin would love to take credit for it but the pressure to scrap fees has come from the FCA.

    Of course it makes sense to not pay any overdraft nterest when getting peanuts on savings.
    • born again
    • By born again 14th Jan 20, 6:25 PM
    • 1,425 Posts
    • 790 Thanks
    born again
    • #5
    • 14th Jan 20, 6:25 PM
    • #5
    • 14th Jan 20, 6:25 PM
    I think ML is over hyping his status... After all he is only a journalist.

    He has made his money from this site in 2 ways.
    Pre selling it by all the referral kick backs he got for pushing people in certain accounts. I believe 6 figures a year had been mentioned.
    And actually selling it.

    It was the FCA that brought in the revamped regulations. Changing it back to what it used to be. After they had previously agreed a fixed fee was better.

    He does give some very good advice. And some not so good.
    • Ben8282
    • By Ben8282 14th Jan 20, 6:26 PM
    • 4,763 Posts
    • 2,635 Thanks
    Ben8282
    • #6
    • 14th Jan 20, 6:26 PM
    • #6
    • 14th Jan 20, 6:26 PM
    I also agree that it makes more sense.
    You have not wiped out your savings. The amount of money you actually have remains the same and you are not paying any overdraft charges. The overdraft ramsins there to use in an emergency. If you were to use it you would be in exactly the same position as if you had spent your savings.
    • DJMC
    • By DJMC 14th Jan 20, 6:28 PM
    • 63 Posts
    • 81 Thanks
    DJMC
    • #7
    • 14th Jan 20, 6:28 PM
    • #7
    • 14th Jan 20, 6:28 PM
    16% to 40% is a 150% increase, not 24%.
    Originally posted by daveyjp
    40 - 16 = 24
    An increase of 24%
    Or would you have preferred "twenty four percentage points"?

    • DJMC
    • By DJMC 14th Jan 20, 6:36 PM
    • 63 Posts
    • 81 Thanks
    DJMC
    • #8
    • 14th Jan 20, 6:36 PM
    • #8
    • 14th Jan 20, 6:36 PM
    I also agree that it makes more sense.
    You have not wiped out your savings. The amount of money you actually have remains the same and you are not paying any overdraft charges. The overdraft ramsins there to use in an emergency. If you were to use it you would be in exactly the same position as if you had spent your savings.
    Originally posted by Ben8282
    No.
    I would be paying 40% interest whereas my main gripe is that I used to pay 16%. Have the banks been forced to charge 40%? It seems like loads of folks in overdraft with no savings will now be fleeced and others "happy" to pay 16% will no longer be making the banks loads of money as they move savings to current accounts. Additionally, my way of thinking is that I now have less "cheap" cash so I draw in my horns and spend less thus adversely affecting the economy and growth.

    Additionally Nationwide did not notify me of the change of interest rate prior to it happening. They later claimed I had checked a T&C box on entering their website. This is possible, but every time I go to their site there's a box which appears asking me to click "continue". A clever ruse when customers get so hacked off with it they ignore it.

    "Ah well, you should always read everything in small print every time you do anything..." Yes, but life is short and important changes should be labelled "Important Change".
    • eskbanker
    • By eskbanker 14th Jan 20, 6:41 PM
    • 12,163 Posts
    • 15,078 Thanks
    eskbanker
    • #9
    • 14th Jan 20, 6:41 PM
    • #9
    • 14th Jan 20, 6:41 PM
    Additionally Nationwide did not notify me of the change of interest rate prior to it happening. They later claimed I had checked a T&C box on entering their website. This is possible, but every time I go to their site there's a box which appears asking me to click "continue". A clever ruse when customers get so hacked off with it they ignore it.

    "Ah well, you should always read everything in small print every time you do anything..." Yes, but life is short and important changes should be labelled "Important Change".
    Originally posted by DJMC
    They emailed me in August, titled "Important information in your statement email", then "Your Current Account statement is here – along with some important changes" and
    Important information about changes to overdrafts

    From 11 November 2019, we’re changing the way we charge for overdrafts and the text alerts we send you. As these changes could affect you, it’s important to read through the Summary of Changes page carefully. Just click on the button below to read about the changes – and from there, you should download and save or print the document too.

    For now, here’s a quick overview:
    • Any borrowing with a new or existing arranged overdraft will be charged at an interest rate of 39.9% EAR/APR (variable).
    • We’re introducing new text alerts (by 18 December) to make it even easier for you to manage your money. You’ll automatically be opted in to these.
    • We’re removing unarranged overdraft charges. You can’t normally go into an unarranged overdraft, but if a situation arises where you do, we’ll no longer charge you for it.
    • We’re also making some changes to your Terms and Conditions.
    • Willing2Learn
    • By Willing2Learn 14th Jan 20, 6:44 PM
    • 5,199 Posts
    • 4,840 Thanks
    Willing2Learn
    I think I am like the OP in that I have just read that email for the first time. It has been in my 'inbox' as an unread email, until just now.
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    • yksi
    • By yksi 14th Jan 20, 7:17 PM
    • 194 Posts
    • 333 Thanks
    yksi
    I'm struggling to understand why you're annoyed that your savings, which were not earning 16%, are now effectively saving you 16% compared with your situation before the change. Ben8282 already told you that you haven't wiped your savings out and you disagreed - but this doesn't fly. You were thousands in the hole with that overdraft, meaning that the true level of your savings was actually a lie. The only things you lost here was 1, the easy ability to waste money (no idea why you wanted to do that rather than stay out of the overdraft, but it's questionable management to say the least) and 2, a deceptively-high savings figure that belied the truth of your financial situation.

    The total amount is still available to you - if you really needed to, you could empty the current account and then keep going into the overdraft. But it would sting a lot more now, fair enough, and I can understand there's a period of mourning and adjusting to that more accurate savings level.
    £3 a Day January £61/93
    £2020 in 2020 £61/2020
    • born again
    • By born again 14th Jan 20, 8:03 PM
    • 1,425 Posts
    • 790 Thanks
    born again
    Additionally Nationwide did not notify me of the change of interest rate prior to it happening. They later claimed I had checked a T&C box on entering their website. .
    Originally posted by DJMC
    I think you will find that they will have sent a variation of terms & conditions a while ago to cover the change in policy they have been forced to bring in.
    Every bank I'm with have.
    Also Nationwide were one of the 1st to announce the interest rate. So received a lot of publicity.

    You have also missed that the change does not come in till 06/04/2020....
    So you have admitted yourself that you know in advance of the change
    • colsten
    • By colsten 14th Jan 20, 8:56 PM
    • 11,688 Posts
    • 11,046 Thanks
    colsten
    No.
    I would be paying 40% interest whereas my main gripe is that I used to pay 16%.
    Originally posted by DJMC
    I understand you are are horrified by that huge jump. Everybody should be. But why were you happy paying 16% for an overdraft when you had savings, for which you got (at a guess) less than 3%? Does not compute.
    • Elisheba
    • By Elisheba 15th Jan 20, 12:04 AM
    • 120 Posts
    • 994 Thanks
    Elisheba
    Is this every OD then? Blimey, I'm going to have to check through my bank emails as well. I don't remember seeing anything from Barclays.
    Consume less. Live more.
    • eskbanker
    • By eskbanker 15th Jan 20, 12:54 AM
    • 12,163 Posts
    • 15,078 Thanks
    eskbanker
    You have also missed that the change does not come in till 06/04/2020....
    So you have admitted yourself that you know in advance of the change
    Originally posted by born again
    No, OP is right about the date - as per the email I quoted above, the change was effective from 11 November 2019, hence the notifications being issued in August.

    April is the deadline by which changes must be implemented but there was nothing stopping banks (or building societies!) introducing them before then, and right on cue....

    Is this every OD then? Blimey, I'm going to have to check through my bank emails as well. I don't remember seeing anything from Barclays.
    Originally posted by Elisheba
    Barclays announced a new rate of 35% last week, effective from 22 March:

    https://www.moneysavingexpert.com/news/2020/01/barclays-announces-overdraft-shake-up-with-interest-rates-of-35-/
    • hoc
    • By hoc 15th Jan 20, 3:18 AM
    • 317 Posts
    • 171 Thanks
    hoc
    I think ML is over hyping his status... After all he is only a journalist.

    He has made his money from this site in 2 ways.
    Pre selling it by all the referral kick backs he got for pushing people in certain accounts. I believe 6 figures a year had been mentioned.
    And actually selling it.

    It was the FCA that brought in the revamped regulations. Changing it back to what it used to be. After they had previously agreed a fixed fee was better.

    He does give some very good advice. And some not so good.
    Originally posted by born again

    ITV in general over hypes Martin. While his repetitive approach on basics like credit card debt and utility bills is good for the financially ignorant, his simplistic set of advice is increasingly showing its limitations. On a recent TV programme, his advice for a multi-thousand pound long term investment for a baby was a savings account! Not actually investing.


    This particularly change has brought transparency at a cost. For most the previous schemes of convoluted combinations of various penalty fees and overdraft rates were cheaper than a single rate. It will only be a positive change if it leads to banks competing to reduce or those in debt becoming more aware. I find both unrealistic. Nevertheless, no Martin or MSE didn't do this. As much as Martin takes credit for "raising issues" his influence is in reality limited to raising awareness to the public, these changes are the result of various bodies and committees.
    • Malkytheheed
    • By Malkytheheed 15th Jan 20, 8:14 AM
    • 48 Posts
    • 44 Thanks
    Malkytheheed
    Having both savings and an interest bearing overdraft is frankly, ridiculous.
    Last edited by Malkytheheed; 15-01-2020 at 8:41 AM.
    • siborg
    • By siborg 15th Jan 20, 8:29 AM
    • 1 Posts
    • 1 Thanks
    siborg
    Overdrafts are designed for one thing, to make money for the bank.


    You are better off not having an overdraft in the first place, ask your bank to remove it from your account and then do not fall below £0.00 balance.
    • yksi
    • By yksi 15th Jan 20, 9:16 AM
    • 194 Posts
    • 333 Thanks
    yksi
    Overdrafts are designed for one thing, to make money for the bank.

    You are better off not having an overdraft in the first place, ask your bank to remove it from your account and then do not fall below £0.00 balance.
    Originally posted by siborg
    This can impact a credit history. If I had an overdraft and was able to avoid using it, I would definitely not remove it from my account. It shows I'm able to manage available credit responsibly.
    £3 a Day January £61/93
    £2020 in 2020 £61/2020
    • Rosie1957
    • By Rosie1957 15th Jan 20, 10:01 AM
    • 1 Posts
    • 0 Thanks
    Rosie1957
    This is just a general question - now the interest on arranged an unarranged overdrafts is the same, what is the advantage of an arranged overdraft?
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