Changes to overdraft charges

From April 2020, our new rules will make the costs of overdrafts clearer and easier to compare. 7 out of 10 overdraft users will be better off or see no change in cost.

From April 2020, banks can only charge for overdraft users a simple annual interest rate – without additional fees and charges.

All users of unarranged overdrafts will be better off or see no change. In most scenarios, a majority of consumers using an arranged overdraft will also see an improved outcome or no difference. Overall, seven out of ten overdraft users will be better off or see no change[1].

The tables below shows the estimated changes in overdraft costs for a range of typical arranged and unarranged borrowing scenarios at some of the biggest banks and building societies.

Bank/building society	Account name	Old	New	Better off by?
Barclays	Bank Account Personal	£35.00	N/A	N/A
HSBC	Bank Account	£35.00	£0.65	⭡ £34.35
HSBC	Advance	£35.00	£0.65	⭡ £34.35
first direct	1st Account	£35.00	£0.65	⭡ £34.35
Lloyds Bank	Classic Account	£0.00	£0.00	£0.00
Bank of Scotland	Classic Account	£0.00	£0.00	£0.00
Halifax	Reward Current Account	£0.00	£0.00	£0.00
Nationwide	FlexAccount	£5.33	N/A	N/A
Nationwide	FlexDirect	£35.00	N/A	N/A
Royal Bank of Scotland	Select	£56.00	£0.65	⭡ £55.35
NatWest	Select	£56.00	£0.65	⭡ £55.35
Santander	Everday Current Account	£52.00	£0.00	⭡ £52.00

Bank/building society	Account name	Old	New	Better off by?
Barclays	Bank Account Personal	£5.25	£0.57	⭡ £4.68
HSBC	Bank Account	£0.35	£0.48	⭣ £-0.13
HSBC	Advance	£0.32	£0.48	⭣ £-0.16
first direct	1st Account	£0.00	£0.00	£0.00
Lloyds Bank	Classic Account	£1.12	£0.64	⭡ £0.48
Bank of Scotland	Classic Account	£1.12	£0.64	⭡ £0.48
Halifax	Reward Current Account	£1.12	£0.64	⭡ £0.48
Nationwide	FlexAccount	£0.33	£0.65	⭣ £-0.32
Nationwide	FlexDirect	£3.50	£0.65	⭡ £2.85
Royal Bank of Scotland	Select	£6.35	£0.65	⭡ £5.70
NatWest	Select	£6.35	£0.65	⭡ £5.70
Santander	Everday Current Account	£7.00	£0.65	⭡ £6.35

Bank/building society	Account name	Old	New	Better off by?
Barclays	Bank Account Personal	£5.25	£2.88	⭡ £2.37
HSBC	Bank Account	£1.75	£3.10	⭣ £-1.35
HSBC	Advance	£1.59	£3.10	⭣ £-1.51
first direct	1st Account	£0.71	£1.63	⭣ £-0.92
Lloyds Bank	Classic Account	£5.83	£3.22	⭡ £2.61
Bank of Scotland	Classic Account	£5.83	£3.22	⭡ £2.61
Halifax	Reward Current Account	£5.83	£3.22	⭡ £2.61
Nationwide	FlexAccount	£1.67	£3.26	⭣ £-1.59
Nationwide	FlexDirect	£3.50	£3.26	⭡ £0.24
Royal Bank of Scotland	Select	£7.75	£3.24	⭡ £4.51
NatWest	Select	£7.75	£3.24	⭡ £4.51
Santander	Everday Current Account	£7.00	£3.27	⭡ £3.73

Bank/building society	Account name	Old	New	Better off by?
Barclays	Bank Account Personal	£22.50	£2.49	⭡ £20.01
HSBC	Bank Account	£1.50	£2.09	⭣ £-0.59
HSBC	Advance	£1.36	£2.09	⭣ £-0.73
first direct	1st Account	£0.00	£0.00	£0.00
Lloyds Bank	Classic Account	£4.97	£2.76	⭡ £2.21
Bank of Scotland	Classic Account	£4.97	£2.76	⭡ £2.21
Halifax	Reward Current Account	£4.97	£2.76	⭡ £2.21
Nationwide	FlexAccount	£1.43	£2.79	⭣ £-1.36
Nationwide	FlexDirect	£15.00	£2.79	⭡ £12.21
Royal Bank of Scotland	Select	£7.50	£2.77	⭡ £4.73
NatWest	Select	£7.50	£2.77	⭡ £4.73
Santander	Everday Current Account	£30.00	£2.80	⭡ £27.20

Bank/building society	Account name	Old	New	Better off by?
Barclays	Bank Account Personal	£22.50	£12.45	⭡ £10.05
HSBC	Bank Account	£7.52	£13.29	⭣ £-5.77
HSBC	Advance	£6.81	£13.29	⭣ £-6.48
first direct	1st Account	£3.05	£6.99	⭣ £-3.94
Lloyds Bank	Classic Account	£25.46	£13.80	⭡ £11.66
Bank of Scotland	Classic Account	£25.46	£13.80	⭡ £11.66
Halifax	Reward Current Account	£25.46	£13.80	⭡ £11.66
Nationwide	FlexAccount	£7.17	£13.99	⭣ £-6.82
Nationwide	FlexDirect	£15.00	£13.99	⭡ £1.01
Royal Bank of Scotland	Select	£13.51	£13.87	⭣ £-0.36
NatWest	Select	£13.51	£13.87	⭣ £-0.36
Santander	Everday Current Account	£30.00	£14.01	⭡ £15.99

We have only included fee free current accounts.

The figures on new charges use monthly compounding, except for Lloyds Banking Group (Lloyds Bank, Halifax and Bank of Scotland) who have specified that they will apply charges daily. The numbers are based on publicly available information. Previous charges are calculated in accordance with firms’ terms and conditions.

These figures are estimates and may vary slightly from firms’ charges. Such variations will be no more than a few pence, and would be reflective of any variations in compounding and rounding.

Our calculations take account of any interest or fee free buffers.

Where possible we have used firms’ own overdraft cost calculators, which firms were required to introduce by 18 December 2019. Firms may compound or round charges differently, which account for small differences between firms charging the same interest rate (in the absence of any fee free amounts).

For Lloyds Banking Group (Lloyds Bank, Halifax and Bank of Scotland) we have based our calculations on the firms’ representative APR of 39.9%. These firms will price by risk. The representative APR is the best rate the firm expects to offer to at least 51% of customers.

We have taken account of any relevant Maximum Monthly Charges for unarranged overdrafts.

Some firms charge paid item fees, which will no longer be permitted from 6 April, when a customer goes into their unarranged overdraft. This is in addition to unarranged overdraft fees and charges, and is typically charge for each transaction approved transaction into unarranged overdraft. We have included one paid item fee in our calculations where relevant.

In this table, we are treating Barclays’ Emergency Borrowing as an unarranged overdraft.

For firms’ pricing, please refer to their websites.

First published: 22/01/2020 Last updated: 12/10/2020