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Hsbc Increases Overdraft Rates

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HSBC increases overdraft rates

Sascha Hutchinson, This is Money

9 June 2006

HSBC is increasing its overdraft rate from 14.8% to 15.9% on current accounts while slashing its savings rates across the board.

The sweeping changes, which will affect most HSBC customers, come on the back of an OFT directive to banks and credit card companies to reduce the late payment fee on credit cards to £12. The OFT has also threatened to clamp down on overdraft charges.

HSBC will drop the rates on some savings products and business accounts and increase the overdraft rate on all its current accounts. Rates will drop on all cash Isas, Flexible Saver and Instant Access Savings accounts.

The cash Isa will drop from 4.65% to 4.22%, and the rate for HSBC Premier and HSBC Plus customers will drop to 4.7%.

All business account holders will suffer a drop in their interest rate and overdraft rates are being increased on all current accounts. All the changes take effect on Monday.

HSBC denied that the raft of changes was in response to the OFT's card charges ruling, or because of any possible move towards clamping down on overdraft fees. A spokesperson told This is Money that the changes were a result of a more general product review.

But Nick White, head of personal finance at comparison site Uswitch said that it could be the start of a more general move by banks to make up the money that they will lose thanks to the OFT's ruling.

'In time the pricing of financial products will be adjusted,' he said. 'If they've run out of ways of making money they will move back to the core products.

'It's always disappointing to see that sort of movement when there's been no change in the base rate. It's hard for consumers to understand when base rates have stayed the same.'

Despite the changes, HSBC still offers one of the lowest unauthorised overdraft rates of any current account.

But customers can get a better deal on their Isa savings and should consider switching accounts. National Savings & Investments pays 5.05% and Portman Building Society and Barclays both pay 5% on their cash mini Isa.

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Shift around. I've moved my main dealings completely out of HSBC to A+L for the time being. If A+L drop rates then

I will move out of them too.

Vote with your wallet!

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