The banks offering £500 interest-free overdrafts including Lloyds, HSBC and Santander
STRUGGLING borrowers have been given a boost as banks including HSBC, Lloyds, and Santander have upped interest-free overdrafts to £500.
The move follows the city watchdog warning last week that it wants banks to do more to help Brits pushed into debt by the coronavirus crisis.
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At the time it said it wanted banks to offer at least £500 interest-free overdrafts, as well as ensuring borrowers are no worse off compared to before new overdraft rules came into force yesterday.
The proposals are currently being consulted on with the guidance expected to take force later this week.
But in the meantime, a host of major providers have temporarily cut interest rates and increased overdrafts or announced plans to do so shortly.
Below, we round-up the providers offering £500 0 per cent overdrafts.
Will an increased overdraft affect my credit score?
Payment freezes, holidays, and reduced payments are all covered by credit reference agencies' new emergency payment freeze agreement.
This means if you take-up any of these measures due to coronavirus Experian, Equifax and TransUnion have agreed it won't impact your credit score.
But taking out a new overdraft or increasing your existing overdraft limit aren't covered.
This means this information is likely to be passed onto credit reference agencies as usual.
But consumer expert at Experian, James Jones, points out that one application alone shouldn't impact your score - so be careful of making multiple applications in a short time frame.
He adds that increasing the limit on your overdraft shouldn't affect your score, but it will if you start using it as this means your borrowing has risen.
See our credit scores and coronavirus guide for more information.
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Bank of Scotland, Halifax, Lloyds Bank
Bank of Scotland, Halifax, and Lloyds Bank, which are all part of Lloyds Banking Group, will waive interest on overdrafts up to £500 from April 9 until July 9.
This will apply automatically to those already with an arranged overdraft, but new customers will have to apply for an overdraft as normal, which will require a credit check.
If you've got an overdraft under the £500 limit and want to increase it, you'll also have to apply for this.
But Lloyds says this won't impact credit scores.
The bank had already boosted its normal interest-free overdraft to £300 to support struggling customers.
Usually, the interest free amount varies by account.
Some of Lloyds current accounts have no interest-free overdraft, while the rest have a £50 interest-free buffer, unless you're a Premier or Premier Vantage customer when you get a £250 interest-free overdraft.
First Direct
First Direct has revealed plans to introduce an interest free buffer of £500 but it's yet to confirm when this will take force, how long for, which customers will get it, or if it will be automatic.
It's only said it "will be making these changes in the next week" and asked customers to "please bear with us as we work this through".
The bank's account comes with a £250 interest-free overdraft as standard, which until now hasn't increased.
HSBC
HSBC revealed last week that it would automatically waive interest on arranged overdrafts up to £500 from April 9 for customers who already have them.
This will apply for three months from this date.
But HSBC customers will need to apply for new overdrafts and for overdraft limit increases, information on both of which will be passed on to credit reference agencies.
HSBC already upped its interest-free overdraft from £25 to £300 last month.
M&S Bank
M&S is automatically waiving interest on pre-arranged overdrafts of up to £500 from April 9 for three months.
But if you want to increase your overdraft or take out a new one you'll will be credit checked.
The bank previously offered interest-free overdrafts of £250 as standard.
Santander
Santander will automatically waive the interest on the first £500 of any arranged overdraft used between April 6 (yesterday) and July 9.
This is an increase on the £350 buffer it had initially planned to introduce yesterday.
You need to apply for both a new overdraft to increase your existing overdraft - information on this will be passed on to credit reference agencies.
The bank doesn't have an interest-free amount on its overdraft normally.
TSB
From April 8 until July 8, TSB will implement an interest free overdraft buffer of up to £500 for all arranged overdrafts.
This will apply automatically for existing borrowers, although you will need to ask TSB if you want to increase your overdraft to the £500 interest-free limit.
Information on overdraft increases will be passed onto credit reference agencies.
New customers will have to apply for an overdraft as normal and this information will also be passed onto credit reference agencies.
More on coronavirus
TSB's regular current account has no interest-free buffer normally and until now it hadn't introduced an interest-free period to help coronavirus-affected customers.
In addition, banks are offering three-month mortgage repayment holidays, as well as payment holidays on loans and credit cards.
Bill providers are also offering help to households struggling to pay.