Coronavirus: HSBC, First Direct and M&S 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- Rates on 3-year loans have gone up since December, with some of cheapest offers withdrawn in recent days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
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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Rates on three-year loans have gone up since December, with some of the cheapest offers withdrawn in recent days following a surge in applications.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
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.
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.
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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