Do I really need an overdraft?
Many people in the UK will have access to "interest-free" overdrafts for which they may be charged a small administration fee on a monthly basis. However, do we really need an overdraft or is it simply a long-term extension of our own credit facilities?
The ideal of an overdraft should simply be access to emergency credit at very short notice. However, it can be very easy to fall into the trap of accumulating your overdraft facility with your income on a monthly basis to arrive at "accessible credit limits". This can often lead to situations where we fall into our overdraft facility earlier and earlier each month which can often lead to extended overdraft facilities which are often more expensive and attract higher interest rates.
Even an interest-free overdraft facility, although often very useful at the time, can be the first step towards more debt and more charges in the future. We all need to be vigilant and keep within our budgets and not automatically assume that our overdraft facilities are part of our "everyday budget". It is easy to suggest that a £100 overdraft is simple to pay back but this could become £200, £300, etc and the situation can easily get out of control.
New banking reforms hit the marketplace today
The 1st November will forever be remembered as the pivotal day in the future make-up of the UK consumer banking industry after the Financial Services Authority (FSA) took control. The FSA has replaced a number of voluntary banking codes which have been in place for many years but which ultimately gave overall power to the banking institutions and banking associations. So what does this mean for UK...Read More
Competition for Northern Rock takeover
Northern Rock is set to become the focus of takeover speculation over the coming weeks with news that National Australia Bank and Virgin Money appear set to fight it out for the chance to acquire the controversial UK bank. It is no secret that Northern Rock is currently being split in two by the UK government, into a good bank and a bad bank, and the good bank will be sold off to the highest bidde...Read More
HBOS reduces overdraft fee to just five pounds a day
As we covered in one of our earlier post, more and more banks in the UK are reducing their overdraft charges as we await the announcement of a legal challenge to historic overdraft fees. HBOS, via its subsidiary Halifax, is the latest such bank to reduce its charge to just five pounds a day for those making use of unauthorised overdrafts.
Previously Halifax had charge £35 for refu...
Irish government claims banks will honour their obligations
The Irish government has today confirmed that it fully expects Irish banks to honour their obligations because a failure to do so would seriously jeopardise the government's ability to raise finance in the future. There is no doubt that concern regarding the Irish banking situation continues to grow and with Anglo Irish Bank's senior debt downgraded by three notches today it is easy to see why som...Read More
Is the era of free banking officially over?
Last week's announcement by Lloyds Bank would appear to have sounded the death knell for free banking in the UK with customers now being charged a monthly fee to have in place overdraft facilities. While the issue of "free banking" has been something of a myth in all honesty, it does look as though officially more and more customers will be charged a monthly fee to obtain access to banking facilit...Read More