HSBC, First Direct and M&S Bank to hike overdraft fees
Beware the overdraft rate hike, are you eligible for £140 off your energy bill? Two Boots ‘Big Deals’, huge 45GB Sim for £15/mth and give to charity this Christmas. These are our Money Saving Expert Martin Lewis’ Deals of the Week.
Warning to all HSBC, First Direct and M&S Bank overdraft users – your charges are going up
HSBC, First Direct and M&S Bank (all owned by the same parent group) have all now announced they will be hiking the cost of arranged overdrafts to 39.9%APR. This follows Nationwide who also hiked its charges to 39.9% APR last month (11 November). These hikes are because the Financial Conduct Authority (FCA) said that by April 2020 all banks must scrap unarranged overdraft fees, and charge a single interest rate for arranged overdrafts, to make it simpler for customers. And indeed these new rates show just how expensive overdrafts are compared to other debt, like credit cards.
I also think this is likely to be the new normal and other banks will follow suit with similar rates.
To see how the change works let’s take First Direct: it’s currently 15.9% EAR on arranged overdrafts of over £250, and a £5 daily charge if you slip into their unarranged overdraft. So as with all banks effectively the burden is being shifted from those who go beyond their overdrafts to those who are within their arranged amount – in many ways this is the culmination of the campaign to reclaim unfair bank charges I was involved in back from 2005. Winners and losers are complex, but most people with arranged overdrafts will end up paying more.
So it's worth seeing if you can switch current accounts. For smaller overdrafts, while it’s hiking charges new First Direct switchers get a free £50 and a £250 0% overdraft meaning if you’ve less than £300 it works. For larger Nationwide FlexDirect currently gives new switchers a 12 month 0% overdraft – while there’s no set limit, it can be large depending on your credit score – yet after the year it goes to 39.9% - so see that as your time to pay it off.
Are you eligible for £140 off your energy bill? Check now.
The Warm Home Discount scheme legally requires suppliers, to help vulnerable people pay for their energy. The money isn't paid to you, it's a £140 rebate applied to your electricity bill between September and March – unless you're on prepay meter, in which case you'll usually be sent a top-up voucher.
There are two ways to qualify, with a different process for each:
- ‘Core group’: If, as of 7 July 2019, you received the guarantee credit element of pension credit, then provided your energy supplier is part of the scheme (most of the big suppliers are), you'll automatically be sent a letter between October and December 2019 confirming when the £140 will be deducted from your electricity bill.
The letter may also ask you to contact a helpline to confirm your details if required. If you are a pensioner on a low income do check if you’re due pension credit not only can it mean a pension top up, it’s also a gateway to other benefits like warm home discount and soon to be the TV licence. Over 1m pensioners are estimated to be missing out – to check call 0800 99 1234 or go to the Gov’s Pension Credit Calculator.
- ‘Broader group’: If you don't qualify for the above, you can still apply providing you get certain benefits e.g. disability premium or pensioner premium (see the link below for full details). If eligible you'll need to apply directly to your supplier and do it as early as possible as discounts are often limited and cut-off dates vary between suppliers. Applications can open as early as August, and some have already stopped taking new applications – so check with your supplier now if you haven't already.
And while I’m talking about energy, a quick reminder to check you are on the cheapest tariff available to you. Two of the big six providers, SSE and Scottish Power, have recently killed their cheap deals – likely as they’ve hit year end targets - and others may follow soon, but you can still save on average £300/year. So do an energy comparison to see if you can switch and save either using Martin’s Cheap Energy Club or any Ofgem approved site.
Martin’s Quickies: Fill of Boots. Usually at this time of year, in the run up to Christmas Boots releases a new ‘Big Deal’ (used to be ‘Star Gift’) each week, yet this week we have two…
- £156 of No7 make-up & skincare normally £80 reduced to £39. Online and in-store you can get a No7 'Best Face Forward' collection for £39 (norm £80), with contents worth £156ish if bought separately. It’s available until 11.59pm on Tue 24 Dec, or while stock lasts. In it you’ll get 11 items including Advanced day cream, Advanced night cream, eye cream and mascara.
- £30 Soap & Glory set. Again online and in-store, you can get a half-price Soap & Glory 'Sweet Tin-tations' body care set for £30 (normally £60) until 11.59pm on Friday 27 December, or while stocks last. The gift set, includes shower gel, body buffer, body butter, body spray, bath bomb, conditioning hair mask, vitamin C facial wash, radiance mask, hand cream, lip gloss and collagen coat mascara – which if the products were bought individually they would cost about £80.
And remember you can always split up the contents to give to many people as gifts.
Ending. HUGE 45GB Sim for £15/mth. If you’re giving a mobile handset as Christmas present this year, especially to children, then this is a great sim-only deal to go along with it. Newbies to Smarty (on Three's network) can get 45GB of data + unlimited mins and texts for £15/mth if you apply by next Tuesday 17 December. It’s a huge amount of data, and while most don't need anything like this much, it's less than many 6GB+ Sims. Crucially, you must select 'auto-renew' at sign-up to get the deal for 1yr but you can cancel any time. It drops to 8GB/mth after 12mths.
Give a gift to charity this Christmas. Christmas is fast approaching, and if you’re yet to buy presents and are panicking about what to buy, then stop. Breathe. Instead of turning Christmas into a retail festival, why not buy them a meaningful charitable gift. For example, a £13.50 donation to Unicef will provide 100 polio vaccines for kids or £31.50 will help deliver a baby, £25 to Oxfam will provide a goat to supply a family with milk, or Good Gifts have a drought survival kit for £28 or provide deworming tablets for 1,000 children for £50. Alternatively donate your time and volunteer to help those in need instead.