The Law is changing!IMPORTANT! Data protection laws are changing soon. Don’t miss out – tell us how you’d prefer to be contacted now.
Banks agree new overdraft warning scheme
Published 22 November 2011 by Lucy Bower
Banks are signing up on a voluntary basis to bring in measures that will help customers to budget and avoid punitive bank charges.
HM Treasury and The Department for Business, Innovation and Skills (BIS) announced new bank account measures following the Independent Commission on Banking's Vickers' Report - the Government review of consumer credit and insolvency - as reported by the Guardian.
The recommendations are being implemented on a 'voluntary' basis by the banks and should help customers to budget better and avoid punitive bank charges.
Customers can opt in to receive texts when their account balance is approaching the red, which should help people avoid going overdrawn. The overdraft warnings will come into effect from April next year, although some bank accounts already offer this service.
Even if you did go a little bit overdrawn, a 'buffer zone' of around £5 to £10 will be extended to all the participating bank accounts, so you wouldn't be charged for going overdrawn temporarily by that amount. These changes won't be put into place until 2013.
Some consumer groups raised the question of whether basic bank accounts will include a 'buffer zone,' as many of them don't provide any overdraft at all.
Another change to bank accounts that we can expect will be seven day switching as of September 2013, which will allow customers to switch to another bank account more quickly than at the moment.
Although some customers won't be able to benefit from these changes until 2013, thinkmoney customers can already benefit from SMS balance updates, including warnings when your balance is low and additional help with budgeting.