Should I get an overdraft?
“Overdrafts is usually a great tool to handle your cashflow issues, however it’s important you ensure you have the fitting one to keep away from sky-high rates of interest.
“This week has seen a change in guidelines relating to overdraft charges after the FCA (Financial Conduct Authority) instructed lenders to simplify fees.
“Banks should now promote solely an rate of interest, with out day by day charges. It was hoped this is able to make the price of borrowing via an overdraft simpler to know and examine with different forms of borrowing, however in response many banks have raised overdraft rates of interest to as a lot as 40 p.c.
After strain from the FCA, banks together with Lloyds, TSB, Bank of Scotland, Halifax, Santander and HSBC at the moment are robotically offering short-term interest-free overdraft buffers of as much as £500 for 3 months to assist prospects struggling through the pandemic.
“These adjustments are time-limited, so anticipate overdraft rates of interest to rise as soon as once more this summer time.”