Barclays, HSBC and Lloyds have become the first major banks to review overdraft charges, as it aims to help customers struggling financially through the coronavirus crisis.
Barclays will waive overdraft charges for a fixed period while Lloyds Banking Group and HSBC are increasing fee-free overdraft buffers to £300.
Barclays account holders will have any interest charges automatically removed from their balance and they do not have to contact the bank. The new policy will apply to all customers, not just those diagnosed with coronavirus.
From 6th April, Lloyds Bank, Halifax and Bank of Scotland customers will be able to access a £300 interest-free overdraft. Customers with an agreed overdraft do not need to take any action as this will automatically be available for three months until 6th July.
From 26th March 2020, HSBC UK is introducing a temporary £300 interest-free buffer on overdrafts, the equivalent of the weekly National Living Wage, for customers with Bank Account and Advance Accounts for a period of three months. This will see an increase on the £25 buffer which was introduced as part of the bank’s new simplified overdraft structure, which recently came into effect.
Vim Maru, Retail Director Lloyds Banking Group said ‘Being there for our customers when they need us is our priority. The introduction of the £300 interest-free overdraft will give our customers some important breathing space at this difficult time. We will be implementing changes to our overdraft interest rates in April meaning all customers will pay less for their overdraft than they do today. We know that this is a difficult time and we want to be there by the side of our customers. The measures we are introducing are all designed to help people through these unprecedented times. We have already helped 70,000 customers with mortgage payment holidays and over 30,000 with loan payment holidays, we will continue to offer our support when our customers need us the most.
Tracie Pearce, HSBC UK’s Director of Retail Banking said “The recent changes to our overdraft structure meant that seven in ten customers who went into the red would see no change in cost or it would cost less, with those using an unarranged overdraft, who are potentially the most vulnerable, benefitting most from these changes. With this temporary buffer for the first £300, up to nine in ten customers who use an overdraft will see no additional cost, based on our previous structure.”
“We are here for our customers in these truly extraordinary times. While we put in place a package of support for customers across a number of product areas, we recently added the option of a mortgage payment holiday, which we had not previously offered, and now we are providing additional relief on overdrafts for millions of our current account customers. This will provide some welcome short term cashflow support at this crucial time.”
Commenting on the announcement John Crossley, Head of Money at comparethemarket.com, said “Barclays, HSBC and Lloyds Group all deserve recognition for cancelling, or pausing arranged overdraft interest charges. The next few months are going to be very tough, both mentally and financially, for the majority of individuals, so providers trying to help those who may be struggling with financial commitments and needing to dip into their overdraft for emergencies is the right thing to do. Actions like this will have a positive impact during this time of uncertainty. Hopefully, other lenders follow suit.”
Gareth Shaw, Head of Money at Which?, said “It is good to see Barclays is waiving overdraft interest charges for its customers, many of whom will be feeling the financial strain during this difficult time. Other banks should consider following suit in order to help their most vulnerable customers.”