Money Talk
Consumer expert Sue Hayward’s savvy finance tips and advice
SUE’S GUIDE TO Saving Money On Overdraft Charges
How much you pay if you go into the red is changing – it’s all part of a shake up ordered by the Financial Conduct Authority which found banks were raking in billions of pounds in overdraft charges.
New rules mean banks must change their charges by next month. Instead of daily and monthly fees for going overdrawn (which can be as much as £10 a day), they’ll charge one single interest rate, but lots of banks have introduced new rates nudging 40%.
So here’s my three ways to save on overdraft charges: Go fee free – Some banks offer ‘fee free’ overdrafts. With First Direct this is up to £250 and new customers opening a Flex Direct account with Nationwide get a year’s free overdraft. Limits are based on individual circumstances.
Clear your overdraft with a credit card – If you’re going to pay interest on your overdraft, consider clearing it with a 0% credit card and save money. Some credit cards allow you pay cash into your bank, known as a money transfer. This switches the money owed over to your credit card and with a 0% card you’ve got breathing space to repay it. Tesco Bank currently has a 0% deal lasting over two years.
Use savings – If you’re going to be charged 40% on your overdraft and you have savings, use them to clear it. Sacrificing the paltry interest you’ll get on instant access savings to avoid being charged 40% is well worth it.
SUE’S TIPS:
◆ Banks are currently writing to customers explaining the new charges so do check where you stand.
◆ You can register for text message alerts from your bank that warn you if you’re heading for the red.
◆ If you bank online it’s easy to move money between accounts in minutes if you need to and save charges.