HSBC customers to see their overdraft charges hiked next year - the changes you need to know
HSBC customers are set to see a significant hike on their overdraft charges from next year, with interest rates to shoot up by nearly 40 per cent.
The bank is to impose the new interest rate on all of its customers from 14 March 2020.
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As of March next year, all HSBC account holders will be moved to a new flat-rate interest charge of 39.9 per cent for both arranged and unarranged overdrafts - an increase from the current rates between 9.9 and 19.9 per cent.
The changes mean that the majority of customers who have gone into their arranged overdraft will be worse off once the new rates come into effect.
However, it is set to scrap its £5 daily usage fee for unarranged overdrafts, with the maximum monthly cost for using one due to fall to £20.
The bank is also introducing an interest free £25 buffer for arranged overdrafts on its bank account and advance bank account.
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The changes come amid new rules being introduced by the Financial Conduct Authority from 6 April that will see banks banned from charging rip-off overdraft fees - although they can still charge interest.
HSBC claims that the changes mean seven in ten customers who use an overdraft will either be better off or their payments will remain the same.
However, Helen Saxon, banking editor at MoneySaving Expert.com, argued most customers will actually be worse off.
She explained: “It’s a definite step forward to cut punishing overlimit fees and to make overdraft costs more transparent.
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Hide Ad“But this change will actually make most people who are in their arranged overdraft, and who owe more than £25, worse off - whichever HSBC account they hold.
“Fortunately, though, there are still banks out there, like First Direct and Starling, offering lower overdraft rates - at least for now.
“If you’re hit by HSBC’s changes, see if you can switch to an account with a cheaper overdraft.”
HSBC is imposing the new interest rate on all of its customers from March 2020 (Photo: Shutterstock)
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These are the changes set to be introduced for the following HSBC accounts:
Bank account, graduate bank account, current account
Current charges: 19.9 per cent for arranged overdrafts and £5 per day for unarranged overdrafts. Charges capped at £80 per monthNew rates: 39.9 per cent for arranged and unarranged overdrafts. Charges capped at £20 per month. There will be no charges for the first £25 of an arranged overdraft with the bank account.
HSBC advance bank account
Current charges: 17.9 per cent for arranged overdrafts and £5 per day for unarranged overdrafts. Charges capped at £80 per month.New rates: 39.9 per cent for arranged and unarranged overdrafts. Charges capped at £20 per month. There will be no charges for the first £25 of an arranged overdraft.
HSBC premier bank account
Current charges: 11.9 per cent for arranged and unarranged overdrafts. Charges capped at £500 per month.New rates: 39.9 per cent for arranged and unarranged overdrafts. Charges capped at £20 per month.
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Current charges: 9.9 per cent for arranged and unarranged overdrafts. Charges capped at £2,000 per month.New rates: 39.9 per cent for arranged and unarranged overdrafts. Charges capped at £20 per month.