Think Money welcomes bank account with overdraft 'buffer'

Financial solutions company Think Money has welcomed the introduction of a new bank account that prevents its customers from exceeding their authorised overdraft limit, and said that such accounts would help more people to avoid getting into trouble with charges and overdraft debts.

HSBC has announced its 'Bank Account Pay Monthly', a new account that will not allow customers to exceed their agreed overdraft limit.

The account will feature an overdraft with a £50 'buffer zone', past which the customer will not be able to spend money.

This will get around the problem of unauthorised overdraft fees, which can often plunge already-struggling borrowers further into debt.

A debt expert at Think Money commented:

"This is positive news for bank account customers. It's not uncommon for people to go overdrawn unexpectedly and then have to pay fees - which can make the problem a lot worse for people who are already struggling.

"Hopefully this will lead to more banks following suit with similar accounts in the near future.

"Although unauthorised overdraft fees might seem like a small thing on their own, they can often be the trigger for more serious problems, especially if the borrower is already working within a tight budget. In that sense, accounts with this overdraft 'buffer' could help to reduce the number of people getting into the kind of situation where they need to seek debt solutions, such as a debt management plan."