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Nationwide’s 39% overdraft interest is ‘taking advantage’ of fees ban

by Ace Damon
Nationwide’s 39% overdraft interest is ‘taking advantage’ of fees ban

Nationwide, my current accountant states that, as a result of the Financial Conduct Authority's recent ban on overdraft fees beginning April 2020, all overdrafts in its current accounts will receive a one-time flat fee of 39.9 % EAR / APR (variable) of 11 November 2019. Will it be the same for all banks and building societies? In this case, it seems that the industry is taking advantage of the decision to introduce unfair and totally disproportionate rates in the face of savings rates below 2% and inflation below 3%.
MD, London

You can be sure that the entire country will be the first of many to seek to minimize the impact of the new requirement. In 2017, banks made £ 2.4 billion in overdrafts and fees – some unsecured loans are 10 times higher than those paid by payday lenders. The FCA acted to make overdrafts simpler and easier to compare rather than limiting charges, although it found that many were "disproportionately high". It also determined that banks would not impose higher rates on some customers.

Overdraft costs vary greatly. Across the country, therefore, we obey the letter of the rules, if not the spirit, with two-thirds of borrowers paying more than before. The new fee is more than double the 18.9% charge that FlexAccount customers now charge for an authorized overdraft and is removing the interest-free buffer of £ 250 from their FlexPlus account.

You would believe altruism is your motive. "Our goal is to make daily lending transparent and put members in control," the document says. "We are removing all unscheduled loan charges and unpaid transaction fees, and will send additional text alerts to help members manage their money."

The FCA says it will keep short prices under review, but refuses to state if it proposes to set a cap on rates.

If you need help, email Anna Tims at your.problems@observer.co.uk or write to Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU. Include an address and phone number. Submission and publication are subject to our terms and conditions

. (tagsToTranslate) Money (t) Consumer Affairs (t) UK News (t) Consumer Rights (t) Interest Rates (t) Economy (t) Business (t) Business (t) Bank Charges (t) Banks and building societies (t) Nationwide

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