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Inside Business

High-interest overdrafts will hit consumers harder than payday loans

The new rates follow a crackdown – but could see some customers’ costs quadruple, writes James Moore

Thursday 05 December 2019 18:55 GMT
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Running up the interest rates: HSBC plans to charge 40 per cent on overdrafts
Running up the interest rates: HSBC plans to charge 40 per cent on overdrafts

If there’s one thing that unites this bitterly divided country, it is the view of the banks as complete and utter (insert chosen offensive expletive from Roger’s Profanisaurus). Of late, they’ve been living up to that with bells on.

It has emerged that HSBC is going to impose the usurious overdraft rate of 40 per cent from March 2020, quadrupling the interest paid by some of its customers. This follows a decision by the Nationwide Building Society to charge a similar rate. With these two having taken the plunge, the others are expected to follow suit.

The background to this is the announcement of a crackdown on the “dysfunctional overdraft market” by the Financial Conduct Authority in June.

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