Banks moving funds from your current account to pay arrears on your credit card

Weskyman

I was unable to make the minimum payment on a credit card this month. On my next statement (Lloyds TSB might as well name them) very nicely stated that under their terms and conditions, as I also have my current account with them, they are allowed to transfer funds from my current account to meet the arrears on the credit card account.

This strikes me as legally questionable

1) They would not be able to do this with a customer who didn't have a current account with them (do they try this trick with savings?) so this could be discrimination, as well as unfair and draconian (but since when did that bother any bank?)

2) If they got a court order to arrest my wages they would legally only be able to recover 11 or 12% per month depending on the amount, so surely legally they can't help them selves to large amounts of arrears from your current account?

Oh, and this was about 4 days after the payment due date. HBOS did this to a friend of my wife to the amount of several hundred pounds so I am sure this does happen, but likr many people she moaned about it but ultimately accepted it.

I don't plan to!

Ames

Unfortunately they can do this, it's called the right of recovery and it's the main reason people who are struggling financially are advised to have their current account with a bank they don't owe money to.

Gemmzie

I'm afraid they can do this and it's in their Terms and Conditions. It's any account that you hold with the same banking group.

So_Sad_Angel

Hi, I am concerned now as I am in a DMP that I am struggling with as , due to illness, my income is falling.

My cr card is with my Bank & does this mean they can just take the available credit?....also if I have overdraft can they draw the available balance on that as well?

Under DMP I should not be extending any credit balance but worry that if they debit my current account it will force me into more debt!!

I worry now that I should open a completely seperate account where I have no other debt...just to protect myself..,is this a good idea??

Angexx

Ames

It's a fantastic idea, I'm surprised your dmp provider didn't tell you to do it, who's your dmp with?

mcjordi

this happened to me with barclaycard and barclays, i soon swapped banks

So_Sad_Angel

I`m off to get another bank account asap....concerned that I`ll be in Netto (trying to save the pennies) & have my card declined!!!.

They have never debited my account to pay my credit card, & my DMP has worked well so far, but I don`t like surprises!!!

Thanks for the thread....hope will raise awareness.

Angexx

mcjordi

yeah there cooonts

lulu999

Had a friend where his personal account went overdrawn and they took the money from his business account (limited liability company) which of course was a completely different legal entity.

Bismarck

lulu999 wrote: »

Had a friend where his personal account went overdrawn and they took the money from his business account (limited liability company) which of course was a completely different legal entity.

now that's impresssive!!!!

interested about sosadangel's question though - can they dip into an overdraft facility to take a CC payment?

whatatwit

In view of what's in their terms and conditions, I would think that they could take 'an available balance'

So if this goes into an agreed overdraft then I don't see why not.