Expats warned to dump their British bank accounts

Posted on 3 Feb at 6 PM in Finance UK
Story link: Expats warned to dump their British bank accounts
Expats warned to dump their British bank accounts

Expats warned to dump their British bank accounts

If you’re preparing to expatriate from the UK whilst keeping on your British bank account, perhaps it’s time to think again about the right home for your money.

Many would-be retirees are nervous about overseas banks, especially if they’re emigrating to a land where English isn’t valued as the world’s second language. After all, with a British bank account you know you’re getting your pension payments and rentals from buy-to-let investments and can at least be certain any regular bills will be paid via a British standing order. However, for the 25 per cent of British expat clients of UK-based banks who work on overdrafts, new rules about to come in could cost far more than the service is worth.

The main rule change obliges British building societies and banks to abandon the present fixed fee or monthly charge systems in favour of an annual borrowing rate, after which separate charges for unauthorised and even pre-arranged overdraft facilities will be banned. The new rules seem to be a reaction to the fact that bank earnings from overdraft charges reached £2.4 billion, with £720 million resulting from unarranged overdrafts, and was designed by Britain’s financial watchdog to curb unfair charges.

In a sneaky response, British banks have now set rates ranging between 35 per cent and the massive 61 per cent charge posted by Lloyds Bank. On average, the rate is around 40 per cent, meaning the charge on an annual £1,000 overdraft will be around £1 per day. The rates are to apply to overdrafts of less than £10,000, with amounts above that limit presumably being negotiable as regards rates. Average expat customers who’re in overdraft due to a manageable emergency will have to pay through the nose whilst those running their luxury lives on massive overdrafts can continue as normal.

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