Millions of HSBC customers are poised to have their overdraft interest rate fees quadrupled under a new lending scheme.
The bank, which currently charges rates of between 9.9pc to 19.9pc to some overdraft customers, is planning to impose a single overdraft rate of 39.9pc on customers from March next year.
HSBC added that it would also remove a £5 daily fee for going into an unarranged overdraft as well as introducing an interest-free £25 buffer to provide leeway for customers who go slightly into the red.
It said seven in 10 people who use the overdraft facility will be better off and added that it would extend the use of real-time text alerts for customers.
Madhu Kejriwal, HSBC UK’s head of lending and payments, said: “By simplifying our overdraft charging structure we are making them easier to understand, more transparent and giving customers tools to help them make better financial decisions.”
But Helen Saxon of MoneySavingExpert.com said she wondered if this would become “the new normal”.