10:00 30 April 2013
From Wednesday, May 1, new changes take effect on the Halifax Reward Current Account and the Ultimate Reward Current Account. Here, we round up all you need to know.
NOTE: The following changes don't take into consideration that, for a limited time only, those switching to the Halifax accounts will benefit from a six-month fee-free overdraft.
Halifax Reward Current Account
What's on offer now?
At the moment, the Halifax Reward Current Account will give you £5 for every month you pay in £1,000 or more. You'll receive this payment no matter whether you're in credit or are using your overdraft.
But if you do go into your overdraft, there is only tiny £10 fee-free overdraft buffer. Anything over that will be hit with the following charges:
Note that this only applies to planned overdrafts. If your overdraft is not arranged with the bank, you'll pay a much higher daily fee of £5 (there is still a £10 fee-free overdraft buffer).
From May 1, the £5 monthly reward will only be paid if you are in credit. In other words, if you dip into the red, you'll forfeit the £5.
Overdrafts will be charged in the same way as before, with one exception - the fee-free overdraft buffer on planned and unplanned overdrafts will rise to £50.
In addition, Halifax is lowering the amount you are required to fund the account with each month from £1,000 to £750. But at the same time, you will need to have at least two direct debits set up on the account.
Halifax Ultimate Reward Current Account
What's on offer now?
Currently, the Ultimate Reward Current Account charges a monthly fee of £15. But, as long as you pay in £1,000 each month, the fee drops to £10.
In return for this fee, you'll get a £300 fee-free overdraft. If you go over this, you'll be charged as follows:
Again, these charges apply to planned overdrafts only. Unplanned overdrafts will be charged at a rate of £5 a day, although there is currently a £10 fee-free overdraft buffer.
On top of this, the account offers travel insurance, AA breakdown cover, mobile phone cover, home emergency cover and card protection.
From May 1, you will only qualify for the lower monthly fee of £10 if you DON’T use your overdraft. As a result, those dipping into the red will now be paying at least £15 a month for the account.
Overdraft fees will remain the same but there will be a £50 fee-free overdraft buffer, up from the previous £10. However, this really only affects unplanned overdrafts as the first £300 of a planned overdraft is fee-free anyway.
The amount you are required to fund the account with each month will be reduced from £1,000 to £750 but you will need to have at least two direct debits on the account.
All other benefits on the account will remain the same.
Who will the changes affect?
Those customers who remain in the black will be the least affected by the changes. After all, the amount Halifax is asking customers to pay in each month is coming down, not going up. And many of us have at least two direct debits set up on our accounts anyway.
But it's those of you who regularly use an overdraft who will be penalised, potentially losing out on £60 a year. That said, if you have the Ultimate Reward Account, regularly dip into the red and make good use of the added perks on the account, such as travel insurance, paying £15 a month may seem like a fair trade.
However, if you don't make use of the perks, it may be worth switching to a new current account. Below, we've highlighted some options.
Overdrafts of £300 or more
If you need an overdraft of £300 or more, it's worth asking Halifax to downgrade your account to the Reward Account. That's because overdrafts over £300 come with the same daily fees on both accounts, only with the Reward Account there's no monthly fee to pay on top.
But a better option might be to open the Nationwide FlexDirect Account instead, which offers a fee-free overdraft for 12 months. After this point, you'll be charged 50p a day on arranged overdrafts over £10, but this is still lower than the amount you'll be charged with Halifax.
Overdrafts of less than £300
If you have a fairly small overdraft, it's worth thinking about switching to First Direct's 1st Account which offers a fee-free overdraft of £250. Anything over this is charged an annual percentage rate (APR) of 15.9%.
You will need to pay £1,500 into the account each month or have another financial product with First Direct, such as a savings account. But you will receive £125 for switching to the account via MoneySupermarket and First Direct is renowned for its excellent customer service.
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