HSBC revamps overdraft fees: Are you a winner or loser?

Nine million current account customers will be affected by an overhaul of unarranged overdraft fees from November, although no exact date has yet been set for the change.

The key overdraft changes are listed below (see our Money Transfers guide to shift loans or overdrafts with 0% money transfers and our Best Bank Accounts guide for the top picks elsewhere).

• New daily charges. The banks are scrapping the £25 fee you pay each time you enter into an unarranged overdraft capped at £150 per 30 consecutive days and will instead be charged a £5/day fee, capped at £80 per 30 consecutive days. You'll continue to pay interest on top though at between 11.9% and 19.9% EAR

• Fees won't be larger than the amount overdrawn. This is the same as before though the fees are now £5 per day, capped at £80 per 30 days. So if for example you are overdrawn by £15 and you pay it back four days later, you'd expect to pay £20 in fees (£5 each day). But as the exceeded amount was £15, the fees won't be greater than this – so you'll pay £15 in charges.

• No fee if you get out of an unarranged overdraft on the same day. If you go into an unarranged overdraft but you get out of it by 11.45pm on the same day, you won't be charged the £5 daily fee.

• New text alert system. A new text system will be created to let you know when you've gone into an unarranged overdraft. These will be sent at 7.30am during working days and 10am on weekends the day after you've gone overdrawn.

First Direct customers get an automatic £250 interest free overdraft amount, while HSBC Premier account holders get a £500 interest free overdraft, so these charges only apply when these customers exceed these limits.

Those who stay within their agreed overdraft limit will continue to pay the current rate of interest between 11.9% and 19.9% EAR.

The £10 overdraft buffer will also remain, where customers are able to go up to £10 overdrawn without incurring any fees.

HSBC and First Direct – the losers

Assuming the fee isn't larger than the amount overdrawn, and not taking into consideration interest, MoneySavingExpert.com has calculated that only a small minority of people will lose out. These people are as follows:

• Customers who go into their unarranged overdraft once and stay in it for between six and 16 days per 30 consecutive days.

• Customers who go into their unarranged overdraft twice and each time stay in it for between six and eight days per 30 consecutive days.

This is because under the new system you're charged per day, instead of how many times you go into an unarranged overdraft.

So after the fees change, going into your overdraft just once for six days would cost you £30 in November, as opposed to the current one off £25 fee. Go into your overdraft twice, both times for six days and you'll pay £60 from November, in comparison to the £50 fee you'd be charged now.

HSBC and First Direct – the winners

Assuming the fee isn't larger than the amount overdrawn, and not taking into consideration interest, MoneySavingExpert.com has calculated that the majority of people will benefit from the changes. These people are as follows:

• Customers who go into their overdraft more than three times within 30 consecutive days, regardless of how long they're in it for.

• Customers who go into their overdraft once, and stay in it for five days or less within 30 consecutive days.

• Customers who go into their overdraft once, and stay in it for 17 days or more within 30 consecutive days.

• Customers who go into their overdraft twice and each time stay in it for five days or less days within 30 consecutive days.

• Customers who go into their overdraft twice and each time stay in it for nine days or more within 30 consecutive days.

This is because the cap on fees will drop from £150 per 30 consecutive days to £80 per 30 consecutive days, so if you constantly dip into your overdraft you're not penalised on how many times you do so, only on how long you're in the red for.

So if you go overdrawn four times in a month for one day only, you'd pay £100 in fees at present, compared to £20 from November.

MoneySavingExpert.com senior money writer, Helen Saxon, says: "HSBC plan these measures to simplify their overdraft charges. And, in the main, most people will have a better deal. But you should watch out if you spend long periods each month over your overdraft limit, as there is a possibility you will pay more.

"Being over your overdraft limit isn't a good place to be. First, speak to your bank to see if you can extend your authorised overdraft. If that’s not possible, there are other tricks and techniques you can try to cut costs. See our 10 tips to cut your overdraft guide."

What does HSBC say?

Andy Mielczarek, head of retail products at HSBC UK, says: "We have spent time listening to our customers on how we can improve our overdraft offering. These changes have been designed to provide a simpler way for customers to understand the cost of any borrowing not agreed in advance, while we have maintained the great value offered on our agreed overdrafts, which have no fees and purely charge interest on what is borrowed."