HSBC has announced it is to introduce a single overdraft rate of 39.9% for its UK customers from March 2020.
The bank suggested the change could as much as quadruple the rate it charges some customers, but also revealed it is removing a £5 daily fee for going into an unarranged overdraft, as well as introducing an interest-free £25 buffer on some accounts.
The £25 buffer will apply to Bank Accounts and Advance Bank Accounts, providing leeway for customers who are slightly overdrawn, and the bank indicated that after the removal of the £5 daily fee for unarranged overdrafts, seven out of 10 customers using an overdraft would be better off, or at least the same, following the changes.
In the UK, HSBC currently charges rates of 9.9% to 19.9% on arranged overdrafts, but the higher rate will be applied across its whole range of accounts – with the exception of its student bank account.
HSBC’s announcement followed a similar move from Nationwide Building Society in July, and the bank’s new annual rate comes in response to the recently introduced tough rules from regulators intended to protect consumers.
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