Many people in the UK woke up this week in amazement to find a letter from HBOS (Halifax and Bank of Scotland one of the largest banks in the UK, and soon to be merged with LloydsTSB to be one of the largest banks in the world with the 12 billion pound merger leaving it with thirty-three percent of the market share), that from the 6th of December 2009, all arranged overdrafts where an account is within that overdraft limit will be charged £1 a day, and all overdrafts where the account is above the agreed overdraft limit will be charged at £5 a day.
This is a little shocking given the current financial climate, and it seems extremely rushed to penalise its' consumer base, when its' current charge of approximately 0.11 percent AER had been in existence for years.
Although not exactly a scam, since all it's customers have agreed to its' User Agreement, which does mention that their overdraft facility can be removed at any time, and a few weeks notice can be given in the event of any price hike, it is still a little shocking to say the least with the current financial circumstances many companies in the West are finding themselves in after the global financial meltdown, for one of the UK largest banks to do this.
Case in point someone with an arranged overdraft of say 500 pounds, with the current interest rate on the overdraft would pay approximately 5.50 pounds a month, but with this directive after the 6th of December 2009 it would be 30 pounds a month every month until the overdraft is cleared, and if the account goes beyond the arranged overdraft facility it will be 5 pounds a day every day, giving 150 pounds a month if the overdraft is not cleared, as can be seen, this is an increase interest on the overdraft of almost 600 percent, this is simply obscene in any light.
It is in essence an indirect rap on customers who have successfully taken banks to court and won over unfair bank charges, losing the banks millions in charges, some that have been on accounts that have been closed for years.
This new interest hike on overdraft fees will hit those who are always using their overdraft, depending on their overdraft as a major factor in their financial planning, with the current financial climate, this does not just include students, but people from every area, organisation and walk of life, and already many are complaining on how they are going to clear an overdraft that they have had for years, and in some cases several thousands in the red, with December the 6th only weeks away, it is clear that this decision is not up for debate or re-arrangment, it reeks of callousness by the banks to line their coffers with impunity regardless of the financial climate or circumstance of their consumer base, and could be part of a greater plan to force everyone to pay a certain amount for the privilege of an overdraft.
What is frightening about all of this is that the overdraft charge is totally legal, and above board.
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