Coronavirus and current accounts

Find out how COVID-19 is impacting current accounts, payments, overdrafts and everyday banking.

Find out how COVID-19 is impacting current accounts, payments, overdrafts and everyday banking.

Anelda Knoesen
From the Money team
6
minute read
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Posted 8 DECEMBER 2020

Coronavirus and current accounts

COVID-19 is affecting the way we make payments and do our banking – as well as our finances – in a variety of ways.

How has the coronavirus affected overdrafts?

Applications for the three-month, £500 interest-free overdraft protection brought in by the Financial Conduct Authority (FCA) ended on 31 October 2020.  
 
Since 1 November, banks have been continuing to offer support to those who’ve experienced a change in financial circumstances because of coronavirus. But this support is being tailored to people’s individual circumstances and offered at the lender’s discretion. 
 
The FCA says this support might include the waiving or reduction of interest on overdrafts, or debt being transferred to a credit product offering on more favourable terms. 
 
James Padmore, Head of Money at Compare the Market, said: “If you’re unhappy with the overdraft fees your bank is charging, it could be worth finding a more competitive provider or considering a cheaper alternative if you need to take out credit. First off, you can speak to your provider to see if they can help.”

What can I do if I’m struggling to repay my overdraft?

If you’re still struggling to repay your overdraft as a result of coronavirus, you should speak to your provider and you can also seek guidance from the Money Advice Service.

Coronavirus and contactless payments

The coronavirus outbreak fast-tracked the payment industry’s decision to increase the contactless payment limit to £45. Retailers have been able to accept the larger payments since 1 April 2020.

If you’re looking to make a contact-free payment of more than £45, mobile payment services including Apple Pay, Samsung Pay and Google Pay may be accepted. Limits on these services depend on the retailer.

Contactless transactions allow payments for goods and services to be made while reducing the chances of spreading bacteria. Retailers benefit from not having to handle cash, while consumers avoid the use of pin pads.

Card payments above £45 are continuing to be made using Chip and PIN and customers may be asked to type in their four-digit code from time to time, even if the amount is under £45.

How to avoid coronavirus scams

Since the outbreak of coronavirus, opportunists have targeted members of the public with promises of cures and fraudulent face mask sales. Phishing emails have also cheated unsuspecting people out of their cash and personal data.

To remain vigilant and ensure you’re not caught out by the fraudsters, read tips on How to avoid coronavirus scams.

Can I visit the bank?

Yes, but you should follow all rules for social distancing and wear a face covering where necessary. Check the local rules for England, Scotland, Wales and Northern Ireland.

Am I still able to switch bank accounts?

Yes. At the start of the pandemic, some banks withdrew their current accounts to new customers as they struggled with staff shortages and a greater volume of coronavirus-related queries. But most are back to business as normal.

If you’re looking to switch accounts, check that your new bank is accepting applications.

What about my savings accounts?

You may have savings set aside that you didn’t imagine you’d need to access for a long time. Several banks are now waiving fees for early withdrawals or closures of fixed rate savings accounts.

Find out more about savings and coronavirus

The withdrawal charge for taking cash out of a Lifetime ISA has been temporarily lowered from 25% to 20% until the end of Monday 5 April 2021. The charge doesn’t apply when a withdrawal is made to buy a first home, or if the account holder has a terminal illness.

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