Barclays gives ... and takes

[Legal Beagles]

After announcing it is cutting its overdraft fees, Rupert Jones points out a few other changes

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Re: Barclays gives ... and takes

Barclays gives ... and takes

After announcing it is cutting its overdraft fees, Rupert Jones points out a few other changes.

Barclays made headlines this week after announcing it is cutting its overdraft fees. But experts say this is a case of giving with one hand and taking with the other.
The bank says it is replacing its unauthorised overdraft with "a fundamentally new approach to overdrawn accounts, which significantly reduces the charges for customers who go beyond their agreed overdraft limit".
On August 18 it is launching "Personal Reserve" - essentially a buffer zone designed to act as a safety net for customers who exceed their agreed overdraft limit if they have one, or go overdrawn if they don't.
For a flat fee of £22, a customer who uses their Personal Reserve will have access to it for five working days. During this time, they can use their buffer zone as many times as they wish and, provided they do not go beyond their Personal Reserve amount, payments will be honoured.
The average Personal Reserve amount will be £250, and customers only pay for it if they use it. All existing customers will be given an opportunity to opt out of the new system if they wish. "There are no individual transaction fees, no arrangement fees, and no interest will be charged on the amount used within Personal Reserve," says a spokesman.
Payments which exceed the reserve amount will be bounced, unless they fall into the category of a "guaranteed transaction," and customers will have to pay £8 for each unauthorised transaction. That is much less than the £35 some people are currently charged. "Our customers wanted a simple, clear way of managing payments when they go beyond agreed limits.
"The Personal Reserve gives certainty about when payments will be paid and when they won't, with just two simple, lower charges," says Mark Parsons, managing director of current accounts at Barclays.
However, these are not the only changes. On July 1, the bank is scrapping the paltry 0.1% credit interest it pays on standard current accounts. "Research shows customers don't value it, and it is worth on average two pence per week to the customer," says a spokesman. And its authorised overdraft rate will rise from 15.6% to 17.9% from June 2.
The bank is also revamping its current account offering.
Barclays says the changes have been made in response to customer feedback, but some would argue it is more to do with the legal battle over bank charges.
Kevin Mountford, head of current accounts at price comparison site moneysupermarket.com, says: "This move of Barclays to reduce overdraft charges with one hand and credit interest with the other is a direct result of the work the Office of Fair Trading has been doing, and something we have been warning about.