Authorised overdraught

[smifffymoto]

HSBC have announced an interest increase upto 39.9%.
How is it legal for them to do this when they only pay 0.01% on savings,especially when they can create money out of fresh air.

[Mikebentley]

Absolutely crackers and should be more heavily regulated.

[anonymous-user]

You’re not obliged to use it or even use them.

[road_rager]

They introduced this just before lockdown and then had to backtrack until now. As someone who lived in my 6.5K HSBC overdraft for years suffice to say I now no longer have an overdraft and pray to god I can keep it that way!

[Mikebentley]

Badda said:

You’re not obliged to use it or even use them.

I don’t use them or any other overdraft facility. I do however agree with the OP that the disparity between interest paid to savers and that charged to borrowers is ridiculous. This is the case with most banks and financial institutions though.

[The Leaper]

Surely the overdraught repayment risk element is greater due to CV19 hence the interest rate hike?

R.

[chrisch77]

You”d better fit a draught excluder with those rates.....

[PorkInsider]

I remember something was on the news about overdraft rates earlier in the year.

It was something to do with the banks being stopped from charging a big fee for actually using the facility, so they increased the interest rates instead.

I believe they set the new rates (like the near 40% you're talking about) but then held off implementing it because of Coronavirus.

https://www.fca.org.uk/data/changes-overdraft-char...

[DoubleD]

Isnt this how a bank makes money? It is a business after all.

[bigandclever]

Not just HSBC of course.

https://www.thisismoney.co.uk/money/saving/article...

[Steve H]

DoubleD said:

Isnt this how a bank makes money? It is a business after all.

I’m all for a bit of capitalism but 40% .

It turns it from a routine form of financial management into a piss take to be used only by the utterly desperate.

[Cudd Wudd]

bigandclever said:

Not just HSBC of course.

https://www.thisismoney.co.uk/money/saving/article...

Yes, Nationwide are mentioned in there. They text me this week to say my temporary overdraft rate of 18.9% would return to 39.9% on 1 Aug. The temporary rate seemed extortionate enough!

[smifffymoto]

It pisses me off,especially when the system is rigged to eliminate cash and forces you to use these crooks.

[bigandclever]

smifffymoto said:

It pisses me off,especially when the system is rigged to eliminate cash and forces you to use these crooks.

I mean, there are alternatives to overdrafts.

[smifffymoto]

Not for me,there isn’t.

[DanL]

Steve H said:

I’m all for a bit of capitalism but 40% .

It turns it from a routine form of financial management into a piss take to be used only by the utterly desperate.

Overdrafts are an unsecured agreed lending facility that you can draw down on and repay, pretty much at will... There’s an obvious cost to that.

They’re not something that should be used as a matter of course, surely?

[DoubleD]

smifffymoto said:

Not for me,there isn’t.

Can you get a loan if you are in debt?

[s111dpc]

Mikebentley said:

Absolutely crackers and should be more heavily regulated.

They are heavily regulated and the rate of 39.9% is a direct result of that, some might say, I’ll thought out regulation!

[Countdown]

smifffymoto said:

It pisses me off,especially when the system is rigged to eliminate cash and forces you to use these crooks.

Does the system force you to take out an overdraft?

The new system is worse for some but (apparently) much better for most people who can't seem to manage their own finances.

Don't worry - iike the PPP misselling scandal I've no doubt that overdraft charges will be considered unfair in 10 years time and you'll get them fully refunded.

[smifffymoto]

DoubleD said:

smifffymoto said:

Not for me,there isn’t.

Can you get a loan if you are in debt?

What do you think a loan is?