Martin Lewis issues urgent warning to anyone currently overdrawn

Money Saving Expert founder Martin Lewis has issued an urgent warning to anyone currently overdrawn.

The finance guru explained that those with overdrafts may soon be facing a huge increase in interest rates.

In April, major changes to the way banks can control their interest rates were introduced.



Banks used to charge higher fees for unauthorised overdrafts, but from April 2020 they wouldn’t have been able to.

However due to coronavirus, new rules put in place by the Financial Conduct Authority (FCA) forced banks to offer people in financial trouble a £500 interest-free overdraft, and banned them from raising interest rates.

But Martin Lewis is warning that this could soon change, and banks could finally implement the huge hike in rates.

Speaking on his ITV show The Martin Lewis Money Show, he said: “40% rates are coming back, I’m afraid.”

“If you can remember back to February, then I was talking about the fact that the regulator had changed the overdraft rules.

“So they could no longer charge you daily fees, and they had to charge you an interest rate.

“All banks seemed to have rocketed their interest rates to a 40 per cent standard, double the high street credit card.

“A total danger debt, meaning you’re better to clear your overdraft than use that money to pay your credit card.”

He added: “What they’re saying in this extension proposal is that ‘no-one should pay more’ has gone, and it’s become ‘no-one who is struggling’ should pay more.

“So if you’re going to have a high interest rate and you’re struggling, you can ask them. If not, you won’t be able to get it cheaper.”

For more information on overdrafts, visit MoneySavingExpert.com.

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