Starling Bank and Monzo Bank raise overdraft charges for customers with poor credit scores
Challenger Banks Starling and Monzo have become the latest providers to announce they will change their overdraft fees ahead of new rules set to be implemented April 2020. At the moment, Monzo charges 50p per day for use of an arranged overdraft.
In the changes rolled out, a new tiered system will be effective from 1st April 2020 where customers will be charged fees based on their credit scores. Those will poorer credit history will pay a higher EAR of 39% while those with a better credit score will be charged 19% EAR.
Starling Bank has announced a similar system will be enacted with fees from 15% to 35% dependent on the customer’s credit score.
These changes have been implemented after the Financial Conduct Authority announced new rules earlier in 2019 to prevent excessive bank charges exerted onto customers who use unarranged overdraft facilities.