- Santander to introduce a single debit interest rate (EAR) of 39.9% for arranged overdraft borrowing – customers will pay 9p per day per £100 borrowed1
- All unarranged overdraft charges and paid / unpaid item fees will be removed2
- 86% (six out of seven) of Santander customers who use an overdraft will pay less under the new charging structure
- Choice Account3 and new online and in-branch support4 available to help customers manage their finances
In response to the FCA’s rules to reform the overdraft market, from 6 April 2020 Santander will be introducing a single interest rate for arranged overdraft borrowing. All on-sale adult accounts5 will charge a rate of 39.9% EAR with the exception of the Choice Account (see below). From 6 April, the bank will also be removing all unarranged charges and paid item fees. All unpaid item fees were removed on 10 December 2019.
The new rate, which is equivalent to a charge of around 9p a day per £100 borrowed, will see six out of seven overdraft customers paying less than they are currently. Anyone using an arranged overdraft of less than £1,065 will pay less than they do today.
Santander will be contacting all customers at least two months ahead of the changes to make them aware of the new pricing structure and provide options for the one in seven customers who will pay more based on their current overdraft usage.
Santander will also provide a range of support measures designed to help customers manage their money better. These include:
- The option to switch to Santander’s Choice Account, which will have a lower EAR of 29.9% with interest capped at £20 per month. There is a monthly charge of £10 which means customers will pay a maximum of £30 per month;
- Access to Santander’s experts who can provide additional personal assistance over the telephone6;
- In-branch “Money Talks” events nationwide, which will provide help with budgeting, planning payments, and setting a savings or debt clearing target;
- A suite of on line resources including:
- five short videos hosted by Gaby Roslin covering the key elements of the Money Talks events for customers who would prefer not to attend a branch;
- a cost calculator for customers to calculate how much their overdraft will cost them, with comparisons to previous charges; and
- details of third-party advisers and charities who customers can contact for further support.
Susan Allen, Head of Retail Banking at Santander, said: “The new single interest rate, combined with the removal of all other overdraft charges from our personal current accounts, provides clear and simple overdraft pricing for our customers, with the vast majority of customers paying less and a daily fee of just 9p per £100 borrowed.
“But we know that helping people manage their day-to-day finances effectively goes beyond simplifying overdraft pricing. We have a range of support services in place – from our over-the-phone experts to our in-branch workshops – and would encourage any customer who would like help in understanding the impact of these changes, or any other aspect of managing their money, to get in touch.”
Under the FCA’s overdraft rules, customers will also be automatically enrolled for text alerts to help them avoid or prevent overdraft fees7. Those customers who repeatedly use overdrafts will also be contacted and, where suitable, offered a more cost-effective approach to meet their borrowing needs.
Arranged overdraft cost comparison
Arranged overdraft for 31 days | Cost before 6 April 2020 (£1 a day below £2,000; £2 a day £2,000-£2,999; and £3 a day £3,000 and over) | Cost after 6 April 2020 (39.9% EAR) |
|---|---|---|
£100 | £31 | £2.89 |
| £200 | £31 | £5.79 |
| £500 | £31 | £14.47 |
| £1,000 | £31 | £28.94 |
| £1,500 | £31 | £43.42 |
| £2,000 | £62 | £57.89 |
| £2,500 | £62 | £72.36 |
| £3,000 | £93 | £86.83 |
| £3,500 | £93 | £101.31 |
- Ends -
The information contained in our press releases is intended solely for journalists and should not be used by consumers to make financial decisions.
Notes to Editors
1. 9p per £100 relates to periods of less than a month (9p is 9.34p to two decimal places). If borrowing is carried over for more than a month, compound charges will apply. The 39.9% EAR is based on compound figures.
2. Unarranged charges on Santander current accounts:
| 1|2|3, 1|2|3 Lite, Private and Select Current Accounts | Everyday Current Account (Total unarranged fees are capped at £50 per month) | Essentials Current Account (Total unarranged fees are capped at £50 per month) | 1|2|3 Student Current Account (Total unarranged fees are capped at £50 per month) | |
|---|---|---|---|---|
| Unarranged overdraft fee | No fee | £6 per day until 6 April 2020 | No fee | £5 per day until 6 April 2020 |
| Unpaid item fee | No fee | No fee – removed 10 December 2019 | No fee – removed 10 December 2019 | No fee – removed 10 December 2019 |
| Paid item fee | No fee | £10 per transaction until 6 April 2020 | No fee | £5 per transaction until 6 April 2020 |
3. Customers who choose to transfer to the Choice account will be able to keep their existing account number, debit card and PIN and won’t need to set up any regular payments again. More details of the Choice account can be found at:
https://www.santander.co.uk/personal/current-accounts
4. Available at:
- https://www.santander.co.uk/personal/support/customer-support/video-guides
- https://www.santanderevents.co.uk/
5. Santander’s on-sale adult current accounts with overdraft facilities: 1I2I3, 1I2I3 Lite, Select, Private, Everyday, Choice.
6. The team can be contacted on 0800 022 4450. Lines are open 8:30am to 7pm Monday to Friday; and 9am to 1:30pm Saturday.
7. Customers who receive an alert will have until 8pm that day to credit their account in order to move back to a positive balance and avoid charges.
Santander UK is a financial services provider in the UK that offers a wide range of personal and commercial financial products and services. It has brought real competition to the UK, through its innovative products for retail customers and relationship banking model for UK SMEs. At 30 June 2019, the bank has around 24,000 employees. It serves around 15 million active customers, via a nationwide branch network, telephone, mobile and online banking; and 62 regional Corporate Business Centres. Santander UK is subject to the full supervision of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) in the UK. Santander UK plc customers’ eligible deposits are protected by the Financial Services Compensation Scheme (FSCS) in the UK.
About Us
Banco Santander (SAN SM, STD US, BNC LN) is a leading retail and commercial bank, founded in 1857 and headquartered in Spain. It has a meaningful presence in 10 core markets in Europe and the Americas, and is the largest bank in the euro zone by market capitalization. At the end of June 2019, Banco Santander had EUR 1.03 trillion in customer funds (deposits and mutual funds), 142 million customers, 13,000 branches and 200,000 employees. Banco Santander made underlying profit of EUR 4,045 million in the first half of 2019, an increase of 2% in constant euros compared to the same period last year.
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