Natwest, Royal Bank of Scotland (RBS.L), and Ulster Bank have paused a planned increase in overdraft interest rates and agreed to waive fees in response to the coronavirus pandemic — but stopped short of freezing interest charges altogether as some rivals have.
RBS, which owns NatWest and Ulster Bank, said on Thursday it would freeze overdraft interest rates at their current level for three months, charging up to a maximum of 19.89% for both arranged and unarranged overdrafts.
The banks will also waive overdraft fees for the period, such as its daily £2.75 charge for unpaid items. Daily usage fees have already been abolished.
The coronavirus pandemic has coincided with planned regulatory changes coming into force in April, which are meant to simplify the way people are charged for overdrafts. The changes have led many banks to announce planned interest rate hikes to at or around the maximum level, which is 40%. RBS and Natwest were due to raise their rate to 39.49% at the start of April.
“We have taken the decision to freeze interest rates on our overdrafts in order to help our personal customers during this unpredictable and unprecedented time,” Les Matheson, chief executive of personal banking at the NatWest Group, said in a statement.
“All of our customers, using their overdrafts, will pay less under this single, lower rate of interest, for any size of overdraft, for at least three months, with no other associated fees and charges.”
RBS’s proposals stop short of those announced by some rivals. Barclays (BARC.L) on Wednesday said it would waive all interest and fees on its overdrafts for a month, while Lloyds (LLOY.L) said it would offer customers an interest and fee-free overdraft of £300 for three months.