HSBC Tightens Overdraft Rules
Bank introduces 'annual review' of customers' overdraft limits
12th September 2006
Customers of HSBC may soon find it more difficult to go into the red with their current accounts, as the banking giant announced a new 'annual review' of customers' overdrafts that could lead to limits being cut.
Against a backdrop of the bank's 36% rise in bad debts as people struggle to meet credit commitments, HSBC said that it had implemented the new rules to clarify what an overdraft facility was and how it was appropriately used.
A spokesperson for the bank said that overdrafts were increasingly being seen as an 'extension to a salary' and even a 'rolling personal loan' despite that fact that overdraft interest rates are generally considerably higher than those of personal loans.
From December, each overdraft will be reviewed annually with the bank contacting the customer to see if an overdraft was still needed, or whether a cheaper form of borrowing such as a personal loan may be more appropriate. HSBC denied suggestions that they would benefit from 'upselling' customers to loan products, saying that the whole exercise would not increase their income or profit.
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Products from HSBC : Bank Credit Card, Regular Saver |
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