Customers concerned over HBOS overdraft fee change

26/10/2009

Customers are facing a "big hike" in charges from major British banks, a consumer group has said.

Which? believes that unhappy HBOS customers should "vote with their feet" and switch providers following the latest fee change, the BBC reported.

The firm, owner of Halifax and Bank of Scotland, has introduced a flat-fee, rather than an interest rate-based, system that charges non-student customers who use their overdrafts within the limit £1 per day.

Those who exceed their limits are also charged £5 per day.

Figures from the BBC suggest that only those with an overdraft of above £1,872 will see an overall reduction in fees, following the rule change.

Dominic Lindley, personal finance campaigner at Which?, told the broadcaster: "It's effectively a big hike in charges ... Anyone who's unhappy with the new charging structure should vote with their feet by shopping around and switching to a current account that best suits their needs."

Responding, an HBOS spokesperson said: "We believe the introduction of this charging structure is the right thing for our current account customers."

Kevin Still, EuroDebt director, commented: "As Which? have stated, anyone who regularly uses their overdraft facility will see a big hike in charges, especially if they are only going over by small amounts, which is characteristic of the type of clients see on a EuroDebt Debt Management Plan. These charges rapidly add up and it is not unusual for someone to be paying in excess of £40 in charges per month. This is one of the reasons that EuroDebt introduced its prepaid current account."

He added: "The account is available to any UK resident and is not subject to credit checks. People on a DMP, IVA or bankrupt are eligible. There is one low monthly fee and no charges for failed direct debits. The account provides an effective way to budget for priority expenditure, sweeping disposable income onto the prepaid card, which can be used to purchase on-line or over the telephone. Full on-line banking facilities are available."

HBOS was bailed out in October 2008 as part of the government rescue schemes, after its corporate stability came under threat due to the worsening credit crunch.

In January, the firm merged with Lloyds TSB to form the Lloyds Banking Group - an organisation that is over 40 per cent taxpayer-owned.

Tags; Debt Management and Banking, Credit Card Lifestyle, Recent Graduate Debt,

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