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Martin Lewis: Do THIS to slash your bank account overdraft to 0{b48783b520e2525d01fbe20e3e39995cffff3effe377c29848cb947436057b25} and AVOID high fees

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Martin Lewis, 47, appeared on This Morning to advise viewers on how to cut their overdraft.

Explaining the Lloyds changes, he said: “Many people have been in touch with me about these changes, some shocked at the cost.

“In the past many of the Lloyds brands simply charged a range of fees and interest, or a flat fee per day no matter how much you were overdrawn by. Now, there will be a flat rate charge of 1p per £7 overdrawn, which works out to around £1 a day per £700 of overdraft (so around £30 a month if you’re in continually) – and there is no cap to this.

“In numerical terms, there are more winners than losers. Though the gains for those who are better off, are smaller than the loses for those who lose out.

“Losers: Those with bigger overdrafts in the thousands, or those constantly in overdrafts in the high hundreds, will usually pay more.

“For example if you were £2,500 overdrawn at the beginning of the month, under the new charges you’ll be charged £110 by the end of the month, but under the old charges it would have been £60/month with most Halifax accounts or £40/month with most Lloyds and Bank of Scotland accounts. 

“Also for Bank of Scotland and Lloyds customers if you are continually overdrawn you can still be worse off even for smaller overdrafts – say £500.

“Winners: Those with smaller overdrafts or who previously bust their limit will pay less.

“For example, £100 overdrawn for a week now costs £1, compared with £7 for a Halifax account and £6 with a Bank of Scotland/Lloyds account before the changes.

“The most important thing to do as it’s been running a couple of weeks is to check your statement now and see how you’re doing.”

Responding to the question of whether people can shift overdrafts and whether it is worth it, Martin explained if you can change bank you should be able to change overdraft.

But there was a warning: those who do so will be credit scored.

He explained: “it’s often not too harsh – but you can be rejected or given a low overdraft limit.

“In fact if you’re paying any overdraft charges or interest you should be able to cut it.

“There are three providers right now offering 0{b48783b520e2525d01fbe20e3e39995cffff3effe377c29848cb947436057b25} overdrafts, more so two will pay you to get them, which can help clear what you owe.

“Switchers to First Direct get a free £100 and ongoing fixed £250 0{b48783b520e2525d01fbe20e3e39995cffff3effe377c29848cb947436057b25} overdraft (15.9{b48783b520e2525d01fbe20e3e39995cffff3effe377c29848cb947436057b25} EAR above that). So if you’ve less than £350 overdrawn, switch and after the free cash you’ll only owe £250. Then it’ll be interest free.

“HSBC Advance gives switchers a free £150 (and another £50 if there after a year) and a six-mont 0{b48783b520e2525d01fbe20e3e39995cffff3effe377c29848cb947436057b25} overdraft (only do it if you can clear in that time), which can be much larger – it says £1,000 is typical.

“Nationwide’s FlexDirect gives switchers a 0{b48783b520e2525d01fbe20e3e39995cffff3effe377c29848cb947436057b25} overdraft for a year (50p/day after) – anecdotally limits here can be pretty high too.

“Plus if you’ve a friend who’s already got a Nationwide account, you both get £100 if you switch via Nationwide’s recommend a friend scheme.

“If you can’t get any of those, the regulator the Financial Conduct Authority says banks must ensure its customers are treated fairly.

“So if you can’t get a better deal elsewhere or are really struggling ask your current bank if it could extend your arranged overdraft (if you think this will help, rather than just get you in deeper), or ask it to waive fees or reduce interest – especially if you’re only just managing to keep afloat.”

You can also shift on 0{b48783b520e2525d01fbe20e3e39995cffff3effe377c29848cb947436057b25} cards, the financial expert and self-titled Money Saving Expert explained to Holly and Phil. 

He said: “A few specialist money-transfer cards let you pay cash in to your bank to pay off your overdraft, then you owe them instead – useful for big overdrafts.

“Virgin Money gives accepted customers 36 months 0 per cent for a one-off 2.9 per cent fee, or if you need slightly longer MBNA is up to 39 months 0 per cent, but with a higher 3.45per cent fee. Remember these deals are only on specialist cards.

“So always repay the monthly minimum or you’ll lose the 0{b48783b520e2525d01fbe20e3e39995cffff3effe377c29848cb947436057b25} deal, and clear the card by the end of the 0 per cent period or they jump to the full rate, 20.9 per cent and 22.9 per cent rep APR.”

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