Finance minister calls on banks to lower interest on overdrafts

The Zuidas, Amsterdam’s large commercial business district, was virtually abandoned. 19 March 2020
The Zuidas, Amsterdam’s large commercial business district, was virtually abandoned. 19 March 2020Jacqueline TellingaSupplied to NL Times

Finance Minister Wopke Hoekstra has called on Dutch banks to reduce the interest rates they charge on overdraft payments in a new move designed to financially support consumers in the wake of the coronavirus crisis. In an interview, Hoekstra told De Telegraaf newspaper that supporting people “is evidently about reducing those percentages,” which are currently “very substantial.”

While interest rates have remained low on savings accounts and loans, overdraft payments on the other hand have been subject to considerably higher interest rates, ordinarily sitting at above 10 percent. “But now we live in different times,” Hoekstra adds with regards to the economic uncertainty brought about by the coronavirus crisis.

“Now it is extra important to make sure people don't get into deep trouble.”

In spite of the move, Hoekstra nevertheless cautions that a low-interest environment can encourage poor lending and leave people under a mountain of debt. "Of course I am in favor of people paying reasonable percentages for overdrafts and no more," Hoekstra explained. “But I also think that it’s important that banks and lenders ensure that people do not easily get into debt because of low rates.”

Already, the first banks have begun responding to the minister’s directive, with Rabobank, ABN AMRO and SNS Bank all having lowered overdraft rates on Friday. Rabobank, for example, lowered the interest rate it charges on overdrawn accounts from 12.9 to 9.9 percent, while SNS Bank dropped its rate from 11 to 9 percent.

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