HSBC and its subsidiary First Direct are presenting a new  £5 a day charge for all customers who wander off over their pre-arranged overdraft account limitations.

The move, which comes into force in November, replaces the existing £25 set-up fee charged each time a customer enters into their casual overdraft account - which is typically £500 or £250 relying on the bank.

HSBC claims the brand-new charging framework will imply casual borrowing fees are "minimized for most of clients", although for some customers the everyday charge might result in higher charges.

The banks are also reducing the optimum amount account owners can be asked for as result of reviewing their restriction. After November they will certainly be capped at £80 in one regular monthly charging period - down from the present max of £150.

HSBC and First Direct will additionally send text to notify customers that review their pre-arranged limitation, though they will not be charged if their balance is back within it just before 11.45pm on the very same day.

The banks say there is no cost for an informal overdraft account demand of £10 or much less.

Andy Mielczarek, head of retail products at HSBC, says: "These modifications have been designed to supply an easier way for consumers to understand the expense of any sort of loaning not agreed ahead of time, while we have actually kept the wonderful worth offered on our agreed overdrafts, which have no fees and simply bill passion on exactly what is obtained."

He states research by HSBC discovered that consumers liked to keep the option to enter casual borrowing as they prefer to have accessibility to funds than face unpaid bills.

Andrew Hagger of Moneycomms.co.uk expbanlains that, unlike a few of its rivals, HSBC hasn't shifted the price trouble for unsanctioned borrowing by increasing the expenses for concurred overdrafts. "To avoid being fined unauthorised overdraft fees, consumers ought to be urged to organize an authorised overdraft restriction with their bank, also if they do not believe they're going to use it," he says.

Customers will certainly not be charged further overdraft account usage fees if their account continues to be in informal overdraft for more than 30 consecutive days.