HSBC, First Direct, and M&S Bank, which are all owned by the same parent group, have announced they will be hiking the cost of arranged overdrafts to 39.9 percent EAR. Following the

news, Martin Lewis has issued a warning to beware the overdraft rate hike. The regulator said banks and building societies would also have to advertise the arranged overdraft prices with an

APR, helping customers to compare them against other products. Mr Lewis continued: “It’s very complicated - there are winners and losers. But, generally, if you are within your overdraft

limit, it will cost you more typically. Not quite for everybody. “The bit I like is that it shows how expensive overdrafts are. People always talk about credit cards being ‘bad’ and debit

you can. “I think this is going to be the new normal.” DON'T MISS The Money Saving Expert founder today explained: “To see how the change works let’s take First Direct: it’s currently

15.9 percent 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. Is there a way for overdraft users to make their money go further? Mr Lewis

suggested: “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 zero

percent overdraft meaning if you’ve less than £300 it works. “For larger Nationwide FlexDirect currently gives new switchers a 12 month zero percent 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 percent - so see that as your time to pay it off." In June earlier this year, the FCA announced

changes to the pricing of overdrafts. An M&S Bank spokesperson told Express.co.uk: “From 14 March, the interest-free overdraft amount on the M&S Current Account will increase from

£100 - £250 and going forward the interest rate charged on any overdraft facility above £250 will be charged at 39.9 percent EAR. “In addition, new M&S Current Account customers will

also select the overdraft amount that meets their individual needs, rather than receiving an automatic £500 overdraft, the first £250 of any overdraft amount will be interest-free.” From

March 2020, HSBC will remove the £5 daily fee for going into an unwarranted overdraft, and reduce the maximum monthly charge from £80 a month to £20 a month on unwarranted overdrafts. The

bank has also said it will introduce a single overdraft rate for arranged and unarranged overdrafts, set at 39.9 percent APR, as well as an interest free £25 buffer on Bank Account and

Advance accounts, providing customers with some leeway should a customer go slightly overdrawn. The bank added that Premier customers will continue to have a buffer of £500 and Jade

customers will see an increase in their buffer to £1,000. Madhu Kejriwal, HSBC UK’s Head of Lending and Payments said: “An overdraft gives people a bit of flexibility with their finances

especially if there is an unexpected cost or emergency repair required. The new £25 buffer we are introducing will also give people some peace of mind that a small miscalculation on spending

won’t incur overdraft charges.” “By simplifying our overdraft charging structure we are making them easier to understand, more transparent and giving customers tools to help them make

better financial decisions.” Dan Wass, Nationwide’s Director of Banking and Insurance, said: “We always strive to make our products as simple and transparent as possible, supported by

services that help our members stay in control. “In the additional context of the FCA’s review of overdrafts, we are confident that the removal of unarranged borrowing charges, the

introduction of a single interest rate, and extending our existing suite of alerts, will set a new standard for simplicity, transparency, and control in meeting our members’ day-to-day

borrowing needs." A spokesperson for First Direct said: ”first direct is making its overdrafts simpler and easier to manage, with a range of changes which include removing the £5

unarranged overdraft fee for unarranged borrowing and cutting the maximum monthly charge by £60.” The spokesperson added that it is currently writing to all of its current account customers

about the overdraft changes, which will come into effect from March 14, 2020.