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Coronavirus and current accounts

Coronavirus and current accounts

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

Anelda Knoesen
From the Money team
5
minute read
posted 15 APRIL 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.

Coronavirus and contactless payments

The coronavirus outbreak has 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.

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 will continue 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 has the coronavirus affected overdraft rates?

The Financial Conduct Authority (FCA) has introduced new measures to help people who need them. These new measures allow customers who’re experiencing a change in financial circumstances because of coronavirus, to request up to £500 interest-free on an arranged overdraft, for three months.

This applies to an existing overdraft on your main current account. The measure should be in force by 9 April, and all firms should be ready to receive customer requests by 14 April.

If you don’t have an arranged overdraft in place, you can request one.

Consumers’ credit ratings won’t be affected if they choose to request the £500 interest-free overdraft facility. But the FCA warns that people should think carefully before entering into one of these arrangements, as they may lead to higher costs in the long term. Their advice is that you should only do so if you need immediate, temporary financial help.

A new set of overdraft rules announced before the crisis also came into force from 6 April. Banks and other financial service providers can only charge a single annual interest rate for arranged and unarranged overdrafts, with no additional daily charges.

The new measures are designed to reduce the cost of borrowing and make fees easier to understand for consumers.

The FCA has said that over the next three months, banks and other financial service providers must ensure that no consumers are paying more than they would have paid before the changes came into force.

See more on coronavirus and credit cards
See more on coronavirus and loans

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, see guidance from the Money Advice Service.

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 still visit the bank?

The Government’s social distancing measures require that you can’t leave your home except in very limited circumstances.

Some bank branches are still open to customers but are likely to be busier than usual. Staff phone lines are also experiencing high call volumes and you may end up waiting on hold for longer than you imagine.

The quickest and easiest option for contacting your bank is likely to be online, either via the bank or finance provider’s website, or by logging into your online banking or mobile banking app.

Am I still able to switch bank accounts?

Some banks have withdrawn their current accounts to new customers as they struggle with staff shortages and a greater volume of coronavirus-related queries.

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

For now, Lifetime ISA rules remain unchanged, meaning you’ll be charged a 25% penalty when you withdraw money for any reason other than to purchase your first home or retire. The only exception to the rule applies if you’re terminally ill.

The information in this article was correct at the time of publication on April 15 2020, but, because of the impact of COVID-19, things are changing rapidly. We aim to keep this page updated, but please check with your current account provider or potential provider directly to confirm any details.

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