There is a major bank overdraft reform about to be in place by April 2020. Martin Lewis (money saving expert) has been campaigning on this subject as well as some recent broadcasts on radio & TV.

CURRENT STRUCTURE

There are currently two main types of charging structure:

• A daily fee charge.
• An interest charge.

This makes it difficult to compare bank charges.

NEW STRUCTURE

The new structure is moving away from daily charges with most banks increasing their interest rate to approx. 40%, which makes this the most expensive form of debt for most people.

This is equivalent to:

• Double the rate of most credit cards.
• Quadruple the rate of most car finances.
• 4-10 times the rate of most personal loans.

If you live in your overdraft, there are tips & tactics to improve your financial position.

• Move what direct debits you can to be paid closer to your payday, so you are overdrawn or using less of your overdraft for a shorter period, thus costing you less.
• If you are never in the black during the month, consider converting your highest balance to another form of debt such as a loan or money transfer credit card. 
• E.g. if your overdraft runs between £-500 & £-1000, your highest balance will be £-500, thus if your bank balance during the month never goes above £-500, then convert it to another form of debt; a loan or credit card balance transfer.
• Do a budget and slowly reduce your reduce your overdraft limit each month.
• Change banks leaving your overdraft behind and pay it off gradually, but this will be the most expensive method.

For further advice, please contact me.