Martin Lewis issues urgent warning to millions who use their overdraft
The cost of living crisis and economy remains the most important issue for Brits as we reach the mid point of the 2024 general election.
And as we hit half-time, Martin Lewis is here once again with another warning that shows the cost crisis is still well and truly here to stay for the time being.
While inflation may be down compared to the highs of last year, and interest rates are finally starting to fall as a result, the costs of running a household remain sky-high.
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As trade union heavyweight Mick Lynch said this week, prices have already gone up on the goods we need to survive. Inflation might have dropped but the cost of your milk, poultry, bread, and snacks haven't fallen with it.
It means that more of us now are relying on overdrafts and credit cards, with a fifth of Brits saying they use their overdraft every single month.
Well, there's a big warning coming your way courtesy of Martin Lewis and his Money Saving Expert (MSE) team.
Issuing the warning in his latest MSE newsletter this week, Lewis and his team said big changes are coming to overdrafts across the country.
What is happening to overdrafts?
Whenever Martin Lewis issues a warning it usually means you're going to worse off if you don't change tact or habits.
That's sadly the case here with overdrafts, with how much it costs you to use yours upping significantly.
As a result of banks changing their overdraft fees, the interest rates being charged to customers is being upped by almost 100%.
Three massive banks are introducing the change, with millions of Brits impacted.
Which banks are impacted?
It is bad news for Bank of Scotland, Halifax or Lloyds customers.
As a result of a fees shake-up, interest rates on overdrafts is being increased to a maximum of 49.9 per cent.
That's an increase from as low as 27.5% on previous rates, which applied to some Club Lloyds customers.
Most Bank of Scotland, Halifax and Lloyds customers were on rates of 39.9%.
MSE says: "The Lloyds Banking Group, which owns all three brands, says most customers will be charged the same or less after the changes – but others will pay more, and some Club Lloyds customers will see their rate nearly double, from 27.5 per cent to 49.9 per cent."
What will happen to you?
MSE approached the Lloyds Banking Group for clarity on which customers would be impacted. Their answer was left a little open on the issue of who is impacted.
"Which rate you get will be based on an 'affordability assessment', including your credit history and how you use any accounts you have with the banks – though the group says 39.9% will remain its standard rate," MSE says.
"The group told us that 'the vast majority' of those with an arranged overdraft will see their rate stay the same or fall – but refused to say how many customers would have their rate increased."
If you are impacted and your interest rate is being increased, you'll be given 60 days' notice of the change. Your rate will then rise from August 2024. You will first be put on a 34.9 per cent or 44.9 per cent rate for six months to 'limit the impact' of the increase. It'll then rise to either 39.9 per cent or 49.9 per cent.
If your rate is going down, you'll be given seven days' notice, with the lower rate coming into effect after that.
There are interest-free overdrafts out there at the moment so if you are impacted and want to avoid the costs, it might be time to start looking elsewhere.
Topics: Cost of Living, Martin Lewis, Money, UK News
Tom Earnshaw