Martin Lewis had an urgent warning to ITV Good Morning Britain viewers about changes to overdrafts.
The Money Saving Expert told the breakfast show that HSBC, First Direct and M&S Bank (all owned by the same parent group) have all now announced they will be hiking the cost of arranged overdrafts to 39.9%APR.
This will mean that often it is better for some to look at credit cards rather than an arranged overdraft.
The 47-year-old said: "This follows Nationwide who also hiked its charges to 39.9% APR last month (on November 11).
"These hikes are because the Financial Conduct Authority (FCA) said that by April 2020 all banks must scrap unarranged overdraft fees, and charge a single interest rate for arranged overdrafts, to make it simpler for customers.
"And indeed these new rates show just how expensive overdrafts are compared to other debt, like credit cards.
"I also think this is likely to be the new normal and other banks will follow suit with similar rates."
He explained how people with arranged overdrafts will end up paying more than the people who go over.
The dad-of-one said: "To see how the change works let’s take First Direct: it’s currently 15.9% EAR on arranged overdrafts of over £250, and a £5 daily charge if you slip into their unarranged overdraft.
"So as with all banks effectively the burden is being shifted from those who go beyond their overdrafts to those who are within their arranged amount – in many ways this is the culmination of the campaign to reclaim unfair bank charges I was involved in back from 2005.
"Winners and losers are complex, but most people with arranged overdrafts will end up paying more."
He added: "So it's worth seeing if you can switch current accounts. For smaller overdrafts, while it’s hiking charges new First Direct switchers get a free £50 and a £250 0% overdraft meaning if you’ve less than £300 it works.
"For larger Nationwide FlexDirect currently gives new switchers a 12 month 0% overdraft – while there’s no set limit, it can be large depending on your credit score – yet after the year it goes to 39.9% - so see that as your time to pay it off."
