Coronavirus: HSBC, First Direct and M&S Bank increase overdraft charges


Lenders cash in on coronavirus: HSBC, First Direct and M&S Bank increase overdraft charges up to 39.9% amid crisis while Halifax and Lloyds are set to do same next month

  • Rates on 3-year loans have gone up since December, with some of cheapest offers withdrawn in recent days
  • Overdraft rates will quadruple in some cases from 9.99% to 39.99% in changes brought in before the crisis
  • Major banks have put rates on 3-year loans of £5,000 up from 7.6% to 7.8 % on average since December
  • Coronavirus symptoms: what are they and should you see a doctor?

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Consumers in Britain face repaying more on personal loans and overdrafts after banks raised the cost as people struggle financially amid the coronavirus pandemic.

Rates on three-year loans have gone up since December, with some of the cheapest offers withdrawn in recent days following a surge in applications.

And overdraft rates will quadruple in some cases from 9.99 per cent to 39.9 per cent in changes brought in before the crisis took hold, reported The Times.

HSBC raised overdraft charges to 39.9 per cent on March 14, up from 9.9 per cent (file image)

Overdraft rates at Halifax (file picture) are set to rise to 39.9 per cent at the start of April

Overdraft rates at Halifax (file picture) are set to rise to 39.9 per cent at the start of April

HSBC raised its overdraft charges to 39.9 per cent on March 14, up from 9.9 per cent for premium arranged overdrafts and 19.9 per cent for standard ones.

First Direct and M&S Bank also raised overdraft fees to 39.9 per cent, while rates at Halifax and Lloyds are set to rise to the same figure at the start of April.

Nationwide and NatWest already charge 39.9 per cent and 39.5 per cent respectively, according to data from financial analysis company Moneyfacts.

The firm also found that the major banks have put rates on three-year loans of £5,000 up from 7.6 per cent to 7.8 per cent on average since December. 

CHANGES TO OVERDRAFT CHARGES ON OFFER TO UK CONSUMERS FROM BANKS IN BRITAIN
Provider Account/Option Name Old arranged overdraft charges New arranged overdraft charges
Interest rate (EAR) Interest free amount Usage fee Total cost for £50 over 7 days Total cost for £500 over 30 days With effect from  Interest Free Amount Interest Rate (EAR) Total cost for £50 over 7 days Total cost for £500 over 30 days
Barclays Bank Bank Account 0.00% £0.75 per day* £5.25 £22.50 22/03/2020 35.00% £0.29 £12.49
first direct 1st Account 15.90% £250.00 £0.00 £0.00 £3.05 14/03/2020 £250.00 39.90% £0.00 £7.00
Halifax Reward Current Account 0.00% £0.01 per £6 OD per day* £0.56 £24.90 06/04/2020 39.90% £0.33 £13.99
HSBC Bank Account 17.90% £0.00 £0.16 £6.81 14/03/2020 £25.00 39.90% £0.16 £13.29
HSBC Advance 19.90% £0.00 £0.18 £7.52 14/03/2020 £25.00 39.90% £0.16 £13.29
Lloyds Bank / Bank of Scotland Classic 0.00% £0.01 per £6 OD per day* £0.56 £24.90 06/04/2020 39.90% £0.33 £13.99
M&S Bank M&S Current Account 15.90% £100.00 £0.00 £0.00 £4.88 14/03/2020 £250.00 39.90% £0.00 £7.00
Metro Bank Current Account 15.00% £0.00 £0.13 £5.78 25/04/2020 34.00% £0.28 £12.18
Monzo Bank Monzo Current Account 0.00% £0.50 per day £3.50 £15.00 01/04/2020 19.00% £0.17 £7.20
Nationwide BS FlexAccount 18.90% £0.00 £0.17 £7.17 11/11/2019 39.90% £0.33 £13.99
Nationwide BS FlexDirect 0.00% £0.50 per day £3.50 £15.00 11/11/2019 39.90% £0.33 £13.99
NatWest / Royal Bank of Scotland Select Account 19.89% £6.00 per month £6.18 £13.51 02/04/2020 39.49% £0.32 £13.87
Santander 123 Current Account 0.00% £1.00 per day* £7.00 £30.00 06/04/2020 39.90% £0.33 £13.99
smile Current 18.90% £0.00 £0.17 £7.17 04/04/2020 35.90% £0.30 £12.77
Starling Bank Current Account 15.00% £0.00 £0.13 £5.78 01/04/2020 15.00% £0.13 £5.78
The Co-operative Bank Current Account 18.90% £0.00 £0.17 £7.17 04/04/2020 35.90% £0.30 £12.77
TSB Classic Plus 19.84% £35.00 £6.00 per month £6.05 £12.97 02/04/2020 39.90% £0.33 £13.99
Virgin Money / Clydesdale Bank / Yorkshire Bank Virgin Money Current Account^ 12.50% £6.00 per month £6.11 £10.86 12/12/2019 19.90% £0.18 £7.52

Homeowners have been flocking to mortgage brokers for advice following the Bank of England’s emergency interest rate cut to a record low of 0.1 per cent.

But most big banks have not yet passed on mortgage rate cuts to borrowers, although many will be applying for a three-month mortgage holiday.

This comes after those suffering financially during the coronavirus outbreak were told they could suspend mortgage repayments for up to three months.

Since the first cut from 0.75 to 0.25 per cent, only Virgin Money said it would reduce standard rates – by the full combined cut of 0.65 percentage points from April 2.

UNSECURED PERSONAL LOAN MARKET ANALYSIS
Average loan rates Mar-19 Dec-19 Mar-20
All lenders £5,000 over three years  6.80% 7.00% 7.10%
High street providers £5,000 over three years 8.20% 7.60% 7.80%
Other providers £5,000 over three years 5.90% 6.60% 6.70%

Former pensions minister Baroness Altmann said: ‘I hope that banks will reconsider the egregious overdraft charges, to help their customers weather the storm.’

She told the Times: ‘The self-employed, those who are away from work due to illness or isolation, or those waiting for benefit payments, will all need help.

‘If they are charged such huge rates then banks might be considered to be taking unfair advantage of the situation.’

A spokesman for UK Finance, the bank trade body, said: ‘All providers are ready to offer support to their customers impacted by Covid-19.’ 

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