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Overdraft fees rise

hifinutt

hifinutt

hifinutt
Less than two months after the financial regulator announced that fixed daily and monthly overdraft fees will be replaced with a single interest rate, Nationwide has announced its rate will be a whopping 39.9% APR – meaning the majority of its customers who use their overdrafts are set to be worse off from November.

Last month, the Financial Conduct Authority (FCA) said that by April 2020 banks must scrap unarranged overdraft fees, and charge a single interest rate for arranged overdrafts. Nationwide has now announced its new rate.

https://www.moneysavingexpert.com/news/2019/07/nationwide-overdraft-changes/

I was rather shocked to get this news of a mssive hike in overdraft fees , over double the cost . seems a bit odd , perhaps someone can explain . surely this will drive folks to expensive money lenders who quote figures like this

Representative example: Amount of credit: £1,800 for 24 months.
Interest rate: 71.3% pa (fixed). 24 scheduled monthly payments of £142.65.
Total amount payable: £3,423.67. Representative 99.9% APR.

https://www.118118money.com/lending7/loans?
 
Our actual borrowing rate is still very low but they've slipped in a £500 monthly fee.

Not much incentive to pay it off then!
 
Overdrafts should be very much a short term arrangement. Unplanned, emergency type expenditure. If there's a permanent overdraft on a current account, then a proper loan should be arranged, at a suitable interest rate.
 
We use one to fund a desperately lumpy cash flow. e.g. the crop of oilseed rape we just harvested having paid for seed and establishment costs 50 weeks ago will not be paid for until next June.
 
simon g said:
Overdrafts should be very much a short term arrangement. Unplanned, emergency type expenditure. If there's a permanent overdraft on a current account, then a proper loan should be arranged, at a suitable interest rate.
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I guess so but that overdraft should be at a decent rate , 39% up from 18% is a joke . i was just about to max out on overdrafts to meet a shorterm need and this has made life difficult . !!
 
Frustrating when the goalposts are moved like that. One of the best financial products I’ve ever used was an offset mortgage. Liquidity available instantly at a very low interest rate.
 
Look at those big buildings in the City and the bonuses bankers receive, someone has to pay for it,
 
Not sure why overdrafts should take the place of loans; surely this would be more expensive. Having never availed myself of an overdraft of any description (though I've had fixed term loans), I don't quite know if it's financially expedient to borrow in this way, though credit card borrowing is, I understand, one of the worst avenues apart from loan sharks.
 
I have been in horrendous financial predicaments in years past, hopefully long past now, but if I was ever in the position where interest or over-draught rates were any concern, I knew that I was doing something drastically wrong and sorted it PDQ. You can stand the heat, whatever it is, or not.

Anyone MUST understand or get advice about where they are financially and what their options are. To not be in that position is absolute lunacy and it will not end well.

There speaks someone who is off the scale for being financially risk averse. I'll never be on the bread line, or rich...…………….
 
russel said:
Look at those big buildings in the City and the bonuses bankers receive, someone has to pay for it,
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Great aren’t they. Money has never been cheaper to borrow. Just make sure it’s via the appropriate facility for your requirements.
 
Bob McC said:
Really?
Barclaycard 27 months interest free one of the worst avenues?
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How does that work, Bob ? If this was for transfers, as so many offer like this are/were, surely any repayment is deducted from this transferred amount, leaving current spending to accrue interest. I know this used to be the catch in days of yore; maybe not now. As I've never had a credit card debt (pay if off by d.d. monthly), nor bothered to transfer, I'm not au fait with current credit card 'offers'. Credit card interest has always been higher than for normalised bank loans.
 
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