Halifax to charge overdrafts daily
16 December 2008
If you have an overdraft with the Halifax then you could soon find yourself paying as much as £2 pounds a day for the privilege.
The reason for such a charge that Halifax are bandying about, is simplicity. Apparently by doing this they are giving customers on the whole a far better deal.
Just how simple is it though, in terms of simple-mindedness, to be charging the same amount to people with a £10 pounds overdraft, as you are charging people with a £1,000 pounds overdraft?
This ‘simple’ account that is going to replace the current account that Halifax offer at the moment, will do away with the current fees and interest structure, and give customers who deposit £1,000 pounds or more into their account a £5 pounds reward, irrespective of whether they are in credit or not.
Halifax is of the opinion that this great concept they have come up with will help customers to deal with confusing interest rates. The case will now be that they will charge people on a daily basis whether their overdrafts are arranged or unarranged.
As it stands customers are paying £28 pounds a month for an unauthorised overdraft and £35 pounds for an unpaid item such as a cheque.
So if a customer has an arranged overdraft then they will pay a pound a day for the privilege if their overdraft is below a threshold of £2,500. if they are above this threshold then they will be charged £2 pounds. In reference to an unauthorised overdraft, a customer will be charged £5 pounds a day until the debt is cleared.
So if you have a small overdraft then you could perceive these charges as somewhat exorbitant. If you have a £100 pounds arranged overdraft every month just to tide you over then you are paying 20% interest on this amount, which seems far less lenient than it does for a customer that has an overdraft of £2,500 pounds.
When compared to other banks and the interest they give on monies in current accounts, what Halifax are offering is really rather poor.
It is believed that these simplified charges that break it down so that consumers are aware of how much their finances are costing them a day, are an attempt by financial institutions to satisfy a greater demand for transparency.