You are here: Home - Credit Cards & Loans - News -

TSB to hike overdraft charges from April

Written by: Paloma Kubiak
TSB has announced it will introduce a single 39.9% interest rate for overdrafts from April.

The lender is writing to customers to let them know of the changes which come into effect on 1 April.

From this date, it will introduce a single rate for both arranged and unarranged overdrafts at 39.9% EAR and it will remove monthly and daily fees attached to all overdrafts.

Currently arranged overdraft customers (Classic, Classic Plus) receive a £35 fee-free buffer and are charged 19.84% EAR on amounts above this. They’re also charged a £6 monthly usage fee.

Unarranged overdraft customers currently have a £10 fee-free and interest-free buffer and are charged £5 a day.

While the maximum monthly charge cap customers pay will come down from £80 a month to £30 a month, it will remove the £10 fee-free buffer for unauthorised overdraft users and the £35 interest-free amount on arranged overdrafts.

A TSB spokesperson, said: “Following these changes, 70% of TSB customers will pay the same, or less, for their overdraft than they currently do.”

As an example, an arranged overdraft customer borrowing £500 over seven days will pay £7.62 now and £3.26 from 2 April. The same amount borrowed over 30 days will cost more at £13.99 in April compared to £12.95 today. When borrowed for a longer period at 60 days, customers would pay £25.90 today, less than the £28.07 in April.

A host of banks have now upped their overdraft rates in response to new rules from the Financial Conduct Authority.

From April 2020, banks and building societies are required to stop charging customers higher prices for unarranged overdrafts in comparison to arranged overdrafts and they will not be allowed to charge fixed daily or monthly overdraft fees.

At the time these rules were announced, experts predicted that banks would hike overdraft fees.

To date, these lenders have announced overdraft hikes: Barclays, Santander, Nationwide, HSBC, First Direct, M&S Bank, Monzo, Starling, RBS and NatWest.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

Coronavirus and your finances: what help can you get in the second lockdown?

News and updates on everything to do with coronavirus and your personal finances.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Buying abroad: top five overseas hotspots

Many of us dream of a place in the sun, but which countries are most popular with Brits buying abroad?