Abacus Daily Debt News

HBOS overdraft hikes ‘a mixed bag’

The recent decision by Halifax and the Bank of Scotland (HBOS) to increase its charges for overdrafts above a certain amount has been highlighted as being both a positive and a negative by an industry expert.

Andrew Hagger, spokesman for financial comparison site Moneynet, observed that such a move was beneficial because "they are doing away with the interest element", as people are always unaware of the amount incurred by going overdrawn.

However, he also stated that "the trouble comes" in comparing the fees generated under the new system with those from the previous process.

Debtors have been advised to consider using a different provider, or alternatively monitor their budgets. "If you’re constantly overdrawn," Mr Hagger said, "then you need to look at that issue."

His comments come in response to the banks’ plans to charge those with an arranged overdraft of up to £2,500 a £1 fee a day and those with accounts over £2,500 £2 daily.

By Sarah Adie