Sharon McDougall - 23rd January 2020 - 2 minutes to read
Personal finance experts have warned overdraft users to find out just how much they could soon be paying in interest on their facilities as new rules affecting those products come into effect from April.
Martin Lewis, the founder of the website Money Saving Expert, has called on people to take action urgently to avoid finding themselves paying as much as 40 per cent in interest on their overdraft debts.
The Financial Conduct Authority (FCA), which regulates all the UK’s financial markets, is introducing a major overhaul of rules relating to overdrafts and the consequences could be significant for millions of people who borrow money via their bank or building society accounts.
For the FCA, a priority goal in designing its new rules has been to reduce the scale of interest and the frequency of charges consumers are hit with in relation to unarranged overdrafts.
However, in response to the altered rules, several of the biggest banks in the UK will be increasing their interest rates on all their overdraft facilities.
Part of what regulators are insisting of service providers is that they charge for overdraft borrowing based on annual interest rates, rather than daily or monthly charges.
According to the FCA, 70 per cent of all overdraft users will be better off or no worse off as a result of its changes to the relevant rules but the organisation has also noted that “there are some scenarios where consumers will pay more”.
“People who are likely to pay more for an overdraft are those borrowing larger amounts for longer periods of time, who should consider alternatives to borrow more cheaply,” a statement from the FCA make clear.
“Overdrafts were not designed to be used for large amounts for long periods of time,” said Christopher Woolard, the FCA’s executive director of strategy and competition.
“Consumers should consider other methods of credit if they find they need to borrow for longer.”
Martin Lewis though has described overdrafts as now representing a “danger debt” and one that could cause major financial headaches for consumers as 40 per cent interest rates come into effect across the market.
If you live anywhere in Scotland and you’re struggling to cope with your personal debts then Scotland Debt Solutions can help. Contact us directly to arrange a FREE and confidential consultation.
Levels of unsecured debt in Scotland increased dramatically during 2022 as the cost of living crisis took its toll on household finances.
Close to half a million Scots are in a position of profound financial hardship, according to a new set of figures.
Disabled people in Scotland are being urged by the government to check whether they might be eligible for benefits that could help make their life a little easier.
Why Choose Us
5 Offices in Scotland
Ask us About
Helping Scots Get
Out of Debt Since 1989
We offer an
Instant Initial Consultation
We'll Help You
Lower Monthly Payments
HELPING SCOTS GET
Out of Debt Since 1989
We'll give you a call
Our Scottish based team can help advise you on your debt problems.
Our personalised debt report will help you better understand your financial position and see where your money is going.
Arrange a call with an expert advisor at a time to suit you or contact our team via WhatsApp for immediate help and advice.
Our Insolvency Practitioners are regulated by ICAS or the IPA and our firm is authorised and regulated by the Financial Conduct Authority
Fees and Information: There are fees associated with our services. These will be fully explained before entering into any of the personal debt solutions referred to on this website. Full details of our fees and how these are charged are fully explained to you prior to you committing to any particular service.