Santander has increased its overdraft interest rate to 40% from 6 April 2020.
Santander joins other banks and building societies, Barclays setting theirs at 35%. Nationwide, HSBC and RBS set theirs at just over 39%.
This comes after a new ruling which starts in April 2020, requiring banks to charge a simple annual interest rate on overdrafts and remove fixed fees.
The Financial Conduct Authority is planning to stop banks and building societies from charging higher unarranged overdraft prices than for arranged overdrafts.
Santander said, “from 5 May 2020 interest on balances up to £20,000 in its 123 account will be cut from 1.5% to 1%”.
The 123 account with up to £20,000 earned 3% in savings interest a year between March 2012 and November 2016, then the rate was dropped to 1.5%, cashback benefits on household bills will also be reduced, yet the account fee of £5.00 per month still remains.