Major changes affecting the cost of overdrafts were introduced in April 2020. Banks used to charge higher fees for unauthorised overdrafts, but since April 2020 they are not allowed to do this.
Interest on all overdrafts is charged at a single annual interest rate (APR), making it easier to compare charges between accounts.
Interest rates from banks and building societies on their overdrafts range from 19% to 40% or more.
If you’re worried, unsure or think you’re now worse off because of these changes, then:
- Contact your bank. Banks might, for example, reduce or waive interest, offer a continuation of overdraft borrowing at the current rate of interest, or agree on a repayment programme, which might include a personal loan. Speak to your bank or building society as soon as you can.
- If you feel vulnerable for any reason, explain your circumstances and your provider is obliged to take this into consideration.
- If these changes mean you’re struggling to pay bills or fall into debt, or you’re already in debt, you should find help as soon as possible.
Find out more in our blog about What the changes to overdraft fees mean for you.