Martin Lewis clarifies a worrying overdraft concern – ‘That’s not correct’

Martin Lewis, 47, has been working with the government to get as much clarity on coronavirus rules as possible. Because of this, it’s not surprising that the Money Saving Expert was keeping a close eye on politicians as PMQs made its return.

READ MORE

• Martin Lewis exposes ‘systemic issue’ airlines us to ‘block’ refunds

Gina Miller, a Co-Founder of SCM Direct, was covering some of the questions she saw live on her Twitter feed.

She highlighted one prudent exchange concerning overdrafts: “At #PMQs weak answer to @PeterBoneUK question on outrageous interest rates some banks charging for overdrafts. 20 percent, rising to 40 percent in July.

“Tweeted weeks ago banks should offer zero percent overdraft facilities – up to £1,000 for 3 mths, then fair rates after that to struggling customers.”

Martin Lewis responded to Gina, highlighting a separate surprising omittance: “My surprise was for a different reason.

“The question totally ignored the @fca rules that the first £500 of all overdrafts are now at zero percent on request and many banks are giving more than that.

“Wasted opportunity to get that message out for me.”

One twitter user then highlighted their fears with the current situation to Martin, clearly showing that many people are unsure of where they stand.

DON’T MISS:
Martin Lewis furlough warning: ‘80% was a myth!’ [WARNING] 
Martin Lewis provides 12 furlough ‘need-to-knows’ [ADVICE]
Martin Lewis provides update on self-employment rules [EXPERT]

User “1BossyBas” said to Martin: “Apparently to get the £500 overdraft you have to go through a credit check in turn affecting your credit score. I don’t think that was made clear.”

This, if true, could be a worrying aspect of financial planning at the moment but thankfully, Martin quickly clarified the rules using very plain English.

As he detailed: “That’s not correct the first £500 of existing overdrafts is done without credit score. If you dont have that facility then a credit score is needed.”

The FCA recently made changes to overdrafts, credit cards and other forms of loans in an effort to support people during this tough period.

READ MORE

• PayPal warning: Martin Lewis highlights a worrying new trend

The measures they introduced will require firms to:

• offer a temporary payment freeze on loans and credit cards for up to three months, for consumers negatively impacted by coronavirus
• allow customers who are negatively impacted by coronavirus and who already have an arranged overdraft on their main personal current account, up to £500 charged at zero interest for three months
• make sure that all overdraft customers are no worse off on price when compared to the prices they were charged before the recent overdraft pricing changes came into force
• ensure consumers using any of these temporary payment freeze measures will not have their credit file affected

While these changes will be relieving for affected consumers caution should be used before they are utilised.

When announcing the changes, the Chief Executive of the FCA Christopher Woolard made the following comments: “Customers should think carefully before making use of these measures and only do so if they need immediate help.

“Where they can still afford to make payments, they should continue to do so.

“We know there is still more work to be done, and we will be announcing further measures to support consumers in other parts of the credit market in the future.”

Source: Read Full Article