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Derin Clark

Derin Clark

Online Reporter
Published: 01/04/2020

Consumers who regularly go into their overdraft will likely notice that the rates they are being charged will change this month, as banks introduce their new overdraft fees.

Although banks will be introducing new fees on both unarranged and arranged overdrafts on different dates, all will have changed by the end of April. The changes are being introduced in response to the Financial Conduct Authority’s (FCA) ban on fixed overdraft fees, along with its ruling that unarranged overdraft fees cannot be higher than those charged on arranged overdrafts. While this will mean that some consumers are paying less when borrowing through their overdraft, for others it will increase the amount they are charged. A full list of the new unarranged and arranged overdraft fees can be found on our story Revealed: the cost of new bank account overdraft charges.

Banks changing overdraft fees in response to Coronavirus pandemic

For consumers who will see an increase in the amount they are charged when borrowing through their overdraft, the changes this month could not have come at a worse time, as many households start struggling financially due to the Coronavirus pandemic. The pandemic and its impact on the economy will mean it is likely that more consumers will start depending on their overdrafts to see them through the next few months.
Some banks have made temporary changes to their overdrafts to help their customers impacted financially by the Coronavirus pandemic.

Barclays Bank, for example, announced that it is waiving interest on all authorised overdrafts from 27 March to 30 April 2020.

Lloyds, Halifax and Bank of Scotland have stated that they are automatically offering interest-free rates on overdraft borrowing of up to £300, which lasts for a three-month period and ends on the 6 July 2020.

HSBC has stated that its customers will be able to borrow up to £300 on their overdraft without paying interest – this was introduced on the 26 March 2020 and lasts for three months.

NatWest, Royal Bank of Scotland and Ulster Bank announced that they are holding their overdraft fees at the current rate for at least three months starting on 30 March 2020, which means customers of these banks will not be paying the new overdraft rates until 30 June 2020.

Santander announced that from the 6 April 2020 it is offering its customers a £350 interest-free buffer on arranged overdrafts for three months.

Nationwide has also stated that it will not charge overdraft interest from 20 April until 1 July 2020 for those financially impacted by Coronavirus. In order to have a fee-free overdraft interest holiday, customers must complete an online form.

Commenting on the overdraft changes, Eleanor Williams, finance expert at, said: “These are uncertain times and no doubt the banks are monitoring the situation very closely. It is becoming evident that some consumers may experience disruption to their household incomes in one form or another over the coming months.

“It is therefore really positive to see some of the biggest banks taking steps to give support and provide relief to many of their customers during these difficult days, and the hope that others may follow suit moving forwards.”


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