We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Halifax Reward
Options
scooby359
Posts: 110 Forumite
Anyone seen this new approach to overdraft charges from Halifax? - http://news.bbc.co.uk/1/hi/business/7780551.stm
I'm curious to what people think of it.. It seems it'll depend on how you bank, for those always in credit, they get £5 a month which is more then they'd get in interest, and the occasional use of overdraft or exceeding it won't cost nearly as much
But for those who live in their overdraft, it would raise costs for a few pence a month in interest to £30+!
So what do people think - good or bad way to respond to the overdraft fee argument? And how is it going to affect you?
I'm curious to what people think of it.. It seems it'll depend on how you bank, for those always in credit, they get £5 a month which is more then they'd get in interest, and the occasional use of overdraft or exceeding it won't cost nearly as much
But for those who live in their overdraft, it would raise costs for a few pence a month in interest to £30+!
So what do people think - good or bad way to respond to the overdraft fee argument? And how is it going to affect you?
0
Comments
-
It seems it'll depend on how you bank, for those always in credit, they get £5 a month
No, the £5/month is for everyone, whether in credit or not.
From http://www.hbosplc.com/media/pressreleases/articles/halifax/2008-12-12-Anewapproa.asp?section=halifax :Customers who fund their account with at least £1,000 a month will receive a net cash payment after tax of £5 – regardless of their debit/credit balance0 -
It seems to me that they are effectively leveling the distribution of charges across the population of cardholders who use overdrafts. At the moment, the vast majority of revenue from current accounts comes from the minority of customers who make heavy use of their overdrafts and those who go over their limits.
It seems to me that HBOS are conceding that traditional penalty charges have had their day. They have moved to a basic daily facility charge for using the overdraft. Even at the cheapest rate (< £2.5K authorised = £1 per day), this new product looks to be significantly more expensive for anyone who uses an overdraft, but still generally stays within their limit.
Allthough the product is to be sold on the basis or simple and transaparent procing, I noticed that they don't quote an APR. I must confess that I haven't done the math yet, but I would estimate the equivalent APR to be significantly higher the the 19.9% the currently quote for arranged overdrafts. Surely the regulator would insist that they advertise the product using an APR - if not how is the consumer supposed to compare the cost of borrowing between account providersThe whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser people so full of doubts.0 -
It would be very hard to publish an APR, as the amount does not change proportionally to the level of the overdraft (apart from +/- £2500)
I've worked it out to be the following, if you kept the account overdrawn by the same amount for a year.
Overdraft amount - approx APR
£10 - 3650% (!!)
£100 - 365%
£1000 - 36.5%
£2000 - 18.25%
£2500 - 14.6%
£2501 - 29.2%
£5000 - 14.6%
Edit: just thought, if you pay in £1k/month and offset the £5 payment against the debit interest, that would reduce the APR by a little. E.g. for £10 o/d, you'd have a mere 3050% interest instead! But it'd reduce the others as well, e.g. £2500 would be 12.2%.0 -
So as I fund my halifax account with £1000 pm and always stay in the black I will get a free fiver everyone month!?!
Result.Kavanne
Nuns! Nuns! Reverse!
'I do my job, do you do yours?'0 -
And this is EXACTLY what we forecast would happen all those years ago when the bank charges revolt began, ie...So as I fund my halifax account with £1000 pm and always stay in the black I will get a free fiver everyone month!?!
Result.- Those financially fortunate and/or organised and disciplined with their money will benefit from these new T&C's.
- Those who were reckless with their account management will benefit from these new T&C's.
- And those in the middle (the largest proportion?), ie those who are less financially fortunate yet very well organised and disciplined and so only use their agreed overdraft facility, will pick up the tab for the rest of us.
As has been said many times on here...be careful what you wish for!0 -
YorkshireBoy wrote: »And this is EXACTLY what we forecast would happen all those years ago when the bank charges revolt began, ie...
- Those financially fortunate and/or organised and disciplined with their money will benefit from these new T&C's.
- Those who were reckless with their account management will benefit from these new T&C's.
- And those in the middle (the largest proportion?), ie those who are less financially fortunate yet very well organised and disciplined and so only use their agreed overdraft facility, will pick up the tab for the rest of us.
As has been said many times on here...be careful what you wish for!
Too few people are willing to accept that banks are businesses and will seek to maintain their profit margins.
They can claim "consumer victories" all the like, but never will the drive to create profit go, and they will just pay for it elsewhere - be it higher loan rates, annual fees, etc. It's likely to happen with credit cards before long.What would William Shatner do?0 -
These terms are an improvement for the majority of customers who do not go into the red. But I can't see the £5 per month interest lasting that long. It's too generous in the current interest rate climate. Also surely this account will attract plenty of jackals who will simply trouser £60 per year for transferring £1000 a month in and out of otherwise dormant accounts.0
-
My initial guess is that this is a "cost neutral" innovation.
Suits me, as long as I stop my slipping a tenner or so overdrawn for a few days.
I suspect the fiver will reduce over time though.
Anybody know if the fiver is taxed as interest would be?0 -
The £5 is net of basic rate tax.0
-
i have a moneyback account with them.
i llive in my 'arranged overdraft' (£2,100) with them by about £1,400 a month.
i pay approx £6.50 a month interest, but from what i've read, as i live in my overdraft i will pay £1 a day so a month it will be £30 or £31 pound, is that right????0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 351.2K Banking & Borrowing
- 253.2K Reduce Debt & Boost Income
- 453.7K Spending & Discounts
- 244.2K Work, Benefits & Business
- 599.3K Mortgages, Homes & Bills
- 177K Life & Family
- 257.6K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.2K Discuss & Feedback
- 37.6K Read-Only Boards