If you’re anything like us then you probably spend more time than you should in your overdraft.
The paycheque goes in the account and the bills, ASOS purchases, takeaway orders and cocktails come out far too quickly leaving us all in the overdraft.
However, there is great news as new rules will stop banks from charging people huge amounts for using their overdraft.
The rules, being introduced by the Financial Conduct Authority, will come into effect next year and will end the pesky ‘£1 a day’ charge.
So from April 2020 you’ll be able to enter your overdraft without the ridiculously big fees.
As well as preventing banks from charging fixed daily or monthly fees for overdrafts, the Authority is also putting a stop to higher fee rates for unplanned overdrafts.
According to the BBC banks will have to instead charge customers a flat annual interest rate if they use their overdraft.
In 2017 banks made £2.4billion in revenue from overdrafts, so the changes will be felt in their pockets. Money Saving Expert's Martin Lewis said: “Many people believe credit cards are bad and debit cards are good.
“But debit cards are debt cards too for the millions who are overdrawn – and this is often a far more expensive type of debt, sometimes even at a higher effective rate than payday loans.”
The FCA added that the reforms will make using overdrafts "simpler, fairer, and easier to manage”.
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