Barclays UK will waive interest on overdrafts for a fixed period, as part of moves to help personal banking customers through tough financial times amid the spread of coronavirus.
The bank said overdraft interest will be waived from Friday March 27 to the end of April, meaning no charges for customers to use their agreed overdraft.
It said customers do not need to call it to set this up – as interest will automatically be removed from March 27.
The move is part of a wider package of support that the bank is offering to help customers who are suffering financial hardship because of coronavirus.
Gillean Dooney, managing director at Barclays, said: “It’s crucial we offer the right support to our customers through this challenging time.
“We have therefore decided to waive all overdraft interest until the end of April, meaning there will be no charges for customers to use their arranged overdraft. We are reviewing all options to help customers after this time to ensure we support those in financial difficulty.”
Last week, HSBC UK said that from Thursday March 26, it is introducing a temporary £300 interest-free buffer on overdrafts for customers with its Bank Account and Advance Accounts for a period of three months.
Like Barclays, HSBC will apply the change to customers automatically, so they do not need to contact the bank.
Banks across the industry have been shaking up their overdraft charging structures as they prepare to comply with new Financial Conduct Authority (FCA) overdraft rules coming into force in April.
The rules mean that from April, banks can only charge overdraft users a simple annual interest rate – without additional fees and charges.
Many banks have pegged their new overdraft rates at 40%.
Ros Altmann, a former pensions minister, praised Barclays’ “excellent” decision.
Baroness Altmann said: “This is excellent news and it is absolutely right that our major banks step up to help customers during this time of crisis.
“Having received billions of pounds of support since 2008, I am delighted to see one of our major banks taking this decision to help customers forced to borrow to tide themselves over. Barclays is showing the way for the rest of the industry. I hope other banks will decide to follow their example.”
She continued: “We know that 40% of the working age population had less than £100 in savings before this crisis began, which inevitably means many will have to turn to borrowing, either via overdraft or credit cards, or other sources. If they also have to pay ruinous interest rates, this will add to their misery.
“I hope that this excellent decision will herald more help and support for customers through this period of disruption.”