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Thread: Overdrafts

  1. #1
    Coaching Staff Smartie's Avatar
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    Overdrafts

    Does anyone have much knowledge of the changes to overdrafts and the rates being charged on them that are being proposed to come in next month?

    The FCA has made a ruling that people exceeding their overdraft limit should not be shafted as hard as they have been in the past - and I’ve heard that to get round this the banks are just going to shaft everyone who has an overdraft by raising their rates to 40%.

    I’ve suggested on the “overpaying mortgages” thread that I have a bit of a debt issue, in addition to credit card debt I have an overdraft limit of £7500 that I pretty much live right up against. I also have an overdraft limit of £25000 at work that we will occasionally go up to (all of my financial problems stemming from buying a decent business with insufficient working capital 10 years ago).

    Obviously this news has me freaking out a bit as it has the potential to nudge both me personally and my business over the edge (both of which shouldn’t really be in this bother).

    Can anyone put my mind at rest at all?


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  3. #2
    @hibs.net private member EH6 Hibby's Avatar
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    I haven’t watched it yet, but Martin Lewis did one of his shows on the changes last night. I know one of his solutions before regarding the charges associated with overdrafts was applying for a money transfer credit card to pay it off, a lot of them have good introductory rates which might give you time to pay them off before the higher rate kicks in

  4. #3
    First Team Breakthrough
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    Martin Lewis money show on itv player mate he went into some depth on it last night.

  5. #4
    https://www.thisismoney.co.uk/money/...borrowing.html

    Some info here - including a table showing many banks that are or have already increased rates.

  6. #5
    @hibs.net private member Jim44's Avatar
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    Is there new legislature on bank communication re. Current accounts? For as long as I can remember, my RBS current account articulates with a savings account and withdraws from it when necessary, so I never go into the red. For the past couple of months I have received a text saying I was about to overdraw and might incur charges. I just ignored it and it sorted itself out, but I’m wondering why this has started to happen.

  7. #6
    I think your fears are realistic mate.

  8. #7
    Quote Originally Posted by Jim44 View Post
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    Is there new legislature on bank communication re. Current accounts? For as long as I can remember, my RBS current account articulates with a savings account and withdraws from it when necessary, so I never go into the red. For the past couple of months I have received a text saying I was about to overdraw and might incur charges. I just ignored it and it sorted itself out, but I’m wondering why this has started to happen.
    I think it'll just be automatic alerts mate, which you can likely switch-off/opt out of.

    I get the same, but I'm not in the position you are in that my savings (if I had any) automatically pull me back over the line.

    However mine only started happening relatively recently so they're maybe generally a fairly new thing across the industry hence you've just started getting them too. You can probably switch the text alerts off online, if there isn't an opt-out option on the end of your text.


    ** Edit** Just realised I haven't answered your question, and you probably already know all the above. Oh well, too much typing to delete now :)

  9. #8
    Quote Originally Posted by Dmas View Post
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    Martin Lewis money show on itv player mate he went into some depth on it last night.
    I'd also recommend his website moneysavingexpert.com and in particular the credit club. Good eye-opener to your credit file etc, and I actually found when I first joined that my credit rating was "excellent" when I expected it to be the opposite. You can also see a lot of your realistic options for loans and cards etc, well worth a look.

    The boy Lewis does some very good work for us regular punters.

  10. #9
    Personal loan could be an option for the credit card/personal overdraft. Seen some rates as low as 2.9% and would give a structured way to pay out of your overdraft without incurring 40% interest. Definitely helped me clear my debts a while back.

  11. #10
    @hibs.net private member HH81's Avatar
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    An overdraft is repayable on demand so they are very risky if you have a high limit.

    I'd start looking into seeing what options are available, possible loan might be the way to go. I'd imagine the fees on 7500 would be quite unmanageable based on what you are saying. Long term if you do nothing may result in a default which would last six years.

    Cut down non essential spend. I see daily that people say they are in financial hardship but continue to eat at fast food places and spend 100s on direct direct to sky etc.

    A lot of the 3rd parties would possibly tell you to go to recoveries for long term assistance but these usually mean a default. It will stop fees though and you will be able to repay at an affordable amount.

    Quite tough at the moment out there. I do work at a bank and see this daily. Cant really give advice as everyone is different.
    Cougars!!!

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