Digital bank Starling Bank is now offering an “overdraft interest holiday” to personal account holders who are struggling financially due to the COVID-19 crisis. Starling Bank customers may apply for a three month interest holiday beginning today (Apri 1, 2020). Effectively, Starling will waive all interest charges on arranged overdrafts during the period. It is important to note that the interest will not be added on at the end of the holiday period and interest payments will only resume the day after the holiday ends.
The interest holiday will not be reported to credit reference agencies and so should not detrimentally impact customer credit files. Starling’s maximum overdraft is expected to remain at £5,000.
Starling customers may apply for an interest holiday, under the following criteria:
- They have suffered a drop in income since 10 March 2020 due to coronavirus. For example, work has dried up or they can’t work due to self-isolation or new caring responsibilities
- The customer already has an arranged overdraft with Starling
Applications for the Starling Coronavirus Support Scheme are open from 1 April 2020 to 30 June 2020. Successful applicants will not have to pay any arranged overdraft interest for 90 days from the day their application is accepted. Starling will contact them after 60 days to remind them when interest charges will resume.
For customers with no arranged overdraft, Starling is removing the interest rate and the maximum monthly charge, currently capped at £2 per month, and setting it at £0, commencing 1 April 2020.
Helen Bierton, Chief Banking Officer at Starling, commented on the decision to allow interest-free overdrafts:
“We wanted to find a sustainable solution to support our customers who may be facing temporary financial difficulties related to the coronavirus emergency and to tide them over for three months.”
Starling Bank holds a full banking license and is regulated by the UK FCA and PRA. The company claims over 1.3 million accounts.