Monday, 21 November 2011
More leeway on overdrafts
Banks have promised to give customers more leeway when they slip into overdraft, in response to a government review of consumer credit.
From next April, all current account holders with leading High Street banks will have the option of a receiving an alert by text, phone or email if they get close to becoming overdrawn.
A year after that they will benefit from a buffer zone of £5 to £10 beyond their overdraft limits. They won't incur zone charges if they stray into the buffer zone for a short period.
And they will be warned at what time of day charges will be imposed, giving them time to top up their accounts to avoid having to pay a penalty.
The new commitments apply to 85% of current account customers who use the top five banks But smaller banks expected are expected to follow suit when they can.
As part of the review, ministers have ruled out imposing a cap on interest rates for credit and store cards.
But retailers have agreed to stop tempting customers into expensive credit by offering discounts on purchases at the time they take out a store card.