Martin Lewis has warned people that the rules about how much banks can charge you are about to change, and it’s not good news.
When coronavirus struck new rules forced banks to offer people in trouble a £500 interest-free overdraft, and outright banned them from raising rates.
But those rules are changing, and that means banks can finally implement the huge interest rate hikes they had planned for April.
Speaking to viewers of the Martin Lewis Money Show on ITV, he said: “40% rates are coming back, I’m afraid.”
But there is still some hope.
(Image: Getty Images/Cultura RF)
The problem comes because the regulator decided overdrafts were too complex, so banned all charges except the interest rate.
Banks, by and large, responded by hiking their overdraft rates to 40% en masse.
This change was set to kick in in April, but ad been delayed as a result of coronavirus.
“When the first coronavirus help came, what they said was ‘no one should be charged more’,” Martin said.
“But they’ve changed it to: ‘No one who is struggling should pay more’.”
That means while people who are struggling are protected, that protection has vanished for everyone else.
But the help is still in place for people in need – so Martin told anyone who needed help to get on the phone to their banks.
Writing in the weekly MoneySavingExpert.com newsletter yesterday, Martin went into more detail.
“In April the regulator introduced up-to-£500 interest-free overdrafts for 3months – under the new proposals, these will be extended,” he explained.
“For those struggling due to coronavirus, on request, the first £500 of authorised overdrafts can be interest-free for a further 3months.
“If you’ve not yet asked for help, you’ll have till 31 October to do so.”