• Overdraft interest rates are set to soar for some as 6 April deadline nears
• Barclays says it will scrap overdraft interest from Friday until end of April
• Other banks may follow suit
Laura Suter, personal finance analyst at investment platform AJ Bell, comments:
“It’s great news that Barclays has taken the move to cancel all overdraft fees, giving some relief to so many when they will be increasing their overdraft use and struggling to even pay the interest charges on the debt.
“Given that the public stepped up to the plate when the banks were in peril in the last financial crisis, it’s good to see at least one major provider help the public in their time of need. It would be nice to see other banks follow this move to help those people who’ve been hit the hardest through this terrible time.
“The deadline for the new overdraft rules is 6 April which now looks like particularly bad timing. Many people are going to be ramping up their debt levels in order to be able to afford the essentials during the Coronavirus crisis, so increases in overdraft rates means the amount we’ll all be paying in interest is set to soar. As a nation we are already £6.7bn into our overdrafts and it’s inevitable that this will leap in the coming months as people face the financial fallout of losing their jobs or having to live on much reduced wages.
“Lots of people were planning to pay off their overdrafts before the rate hike came in, but the financial uncertainty and job losses that Coronavirus brings means that will now be a pipe dream for many.
“Barclays has said it will extend its interest rate relief to the end of April, but I hope they revisit this nearer the time and extend it if the situation hasn’t improved. However, it’s good news that the bank says it will apply the relief automatically, meaning customers don’t have to jump through hoops just to get the help they need.”
Barclays’ announcement: https://www.barclays.co.uk/coronavirus/overdrafts/
