HSBC UK is ramping up its interest-free overdraft buffer to £300 as part of efforts to help customers whose finances have been affected by coronavirus.
From Thursday March 26, HSBC UK is introducing a temporary £300 interest-free buffer on overdrafts for customers with its Bank Account and Advance Accounts for a period of three months.
This is 12 times the £25 buffer which was introduced as part of the bank’s new simplified overdraft structure, which recently came into effect.
The increased interest-free buffer will be given automatically and customers do not need to contact the bank to get it.
With this temporary buffer for the first £300, up to nine in 10 customers who use an overdraft will see no additional cost, based on our previous structureTracie Pearce, HSBC UK
Tracie Pearce, HSBC UK’s director of retail banking, said: “The recent changes to our overdraft structure meant that seven in 10 customers who went into the red would see no change in cost or it would cost less, with those using an unarranged overdraft, who are potentially the most vulnerable, benefiting most from these changes.
“With this temporary buffer for the first £300, up to nine in 10 customers who use an overdraft will see no additional cost, based on our previous structure.
“We are here for our customers in these truly extraordinary times.”
HSBC UK’s package of support for customers also includes the option of mortgage payment holidays and early access to fixed savings.
The bank is also asking customers that, to help it meet the needs of the most vulnerable, customers may consider wherever possible managing their interaction with the bank through its online or mobile channels.
Banks across the industry have been shaking up their overdraft charging structures as they prepare to comply with new Financial Conduct Authority (FCA) overdraft rules coming into force in April.
The rules mean that from April, banks can only charge overdraft users a simple annual interest rate – without additional fees and charges.
Many banks have pegged their new overdraft rates at 40%, with HSBC’s new single overdraft rate at 39.9% having been introduced on March 14.