£35 Fee / Crippling Monthly Interest

Pippa_M

Hi. I have a current account with Halifax. It was originally a student current account from when I was at university, and as a result of that I have a £1,600 overdraft facility. That was used to the hilt when I was a student, and consequently it hasn't been reduced/repaid since. The overdraft was interest free until 12 months after I finished university, but now I'm charged £20 - £25 interest each month (for example this month, I will be charged £22.65). Although I've worked since, it's been mostly part time, so I've not been earning sufficient income to reduce the overdraft. And currently, my only income is JSA. As you can imagine, the interest on the overdraft from a monthly income of £242 is a bit of a bind to say the least.

On top of that, I have a direct debit set up up to pay for internet access from Virgin Media. This month's payment was due on 22 December. I knew that I was close to the overdraft limit, so on that Monday I went to my local branch and paid in sufficient funds to cover the payment. I've done this a few times in the past (by necessity rather than intent), and there's never been any problem before. And I have a mini-statement clearly showing that there were sufficient funds in the account to cover the payment. However, this morning I received a letter stating that "we have refused to make a payment from your account as you did not have enough money available", notifying me that they intend to charge me £35 for this on January 6 (plus an "unauthorised interest rate" on top, whatever that may mean). I rang Virgin Media this morning, and paid using my Halifax Visa debit card.

I've never been in this situation before, and £35 is a huge amount of money for me, due to my current circumstances. Obviously I intend to speak to them about this on Monday morning, and as far as I'm concerned it's their mistake rather than my own. Whether they'll rescind the £35 charge however is another matter entirely.

If they insist on charging me, it's going to cripple me. The possibility of that, plus the interest each month, has made me seriously reconsider whether I wish to continue being a Halifax customer or not. I could open a current account with a different bank, and have my JSA / future salary (there'll be one soon enough - I'm not fussy) paid into it. Then I could tell Halifax that I can't afford the interest payments any longer, and hopefully come to some agreement whereby the overdraft is paid off at £10 a month or something (obviously the payments would reflect my income at the time).

What I'm entirely clueless about though is whether Halifax would accept this, and/or if I'm in any position to 'make them' (via CAB intervention or whatever). And the biggest issue is whether or not any other bank would give me a Visa debit card. I don't have any CCJs or the like against me, nor any credit cards, loans, etc. with any other bank. But obviously I'm currently unemployed. And (although I've no idea whether such information is taken into account or not) I have a small amount of arrears on my water rates and tv licence. Any ideas?

Naomim

Can you open a basic bank account with someone like the Co-op without an OD facility? then you could treat the OD like a loan and if you could get a 0% or low Life of Balance card to transfer the OD to to pay off at a lower rate.

You're on JSA at the moment. What sort of work are you looking for? Are you willing to take any job to get the OD down?

Naomi x

opinions4u

You owe £1600 and banks do tend to charge customers interest on that sort of thing. It's not unusual. You could try switching your overdraft to another bank, but they would also charge you interest (other than the occasional introductory offer).

If you've never faced a £35 charge before, then ask them nicely if they will waive it on this occasion. I would expect them to agree as a gesture of goodwill. But then it would be the last time. Check if you've also been charged £28 for exceeding your overdraft limit (I don't think you will have) and, if you have, ask them to refund this too.

The error is not that of the Halifax. It's a matter between you and Virgin as to when they will collect a direct debit. If you don't fund the account the day before you will be charged. Make it an absolute priority when you find work.

It's time to find a way to get that overdraft down as quickly as possible and stop relying on the bank's money. Only then can you take control of your finances properly.

Pippa_M

Hi, Naomi. Yes, I could (presumably) open an account with any other bank of my choosing. But I don't want to jump ship and lose out on having a Visa debit card. It actually saves me money, as for example if I use it to pay at the supermarket I'm only taking out what I need, rather than withdrawing money from a cash machine and having the change in my purse. And obviously it's pretty much essential if you're buying clothes from eBay, too. But no, I'm not interested in transferring the overdraft to another bank.

And yes, I'm prepared to take any job. Over the past 12 months I've worked in a supermarket, in the packing department of a factory, and as a private tutor for GCSE & A Level English & History students.

Thanks for your reply, opinions4u. However, if I wanted to be patronised, I would've stated as much in my original post. I simply asked two questions - I didn't request a browbeating. I'm well aware of the fact that banks charge interest on overdrafts. And of course I welcomed it at the time, too. Although with hindsight, the fact that they gave someone with no income or guarantee of any in the near future £1,600 to play with seems rather sinister/foolish.

As I quite clearly stated in my previous post, I've paid in sufficient funds to cover the payment on the day it was taken on previous occasions without any problems. I've also been told by Halifax staff that as long as the funds are there before closing there isn't any problem. So therefore the error quite clearly is down to Halifax.

Tell me something I don't know. :rolleyes: They're relying on my money as much as I'm relying on theirs, as they're making £250 - £300 a year from me as long as I remain a customer (with an overdraft).

olly300

This is more likely to help you:
http://www.nationaldebtline.co.uk/

Then you can decide your options.

YorkshireBoy

Pippa_M wrote: »

As I quite clearly stated in my previous post, I've paid in sufficient funds to cover the payment on the day it was taken on previous occasions without any problems. I've also been told by Halifax staff that as long as the funds are there before closing there isn't any problem. So therefore the error quite clearly is down to Halifax.

I don't see it as clearly as you do. Then again, I've read your T&C's...have you?

Condition 21.6 of your T&C's clearly states (in writing) that the money should be in the account the bank working day before. It also states that the DD can be paid at any time during the bank working day. Maybe you got lucky last time because it was paid later in the working day?

http://www.halifax.co.uk/HICA/pdf/halifaxtandc.pdf

Tell me something I don't know. :rolleyes:

Lose the 'chip' before you ring Halifax to ask for leniency.

opinions4u

Pippa_M wrote: »

Hi, Naomi. Yes, I could (presumably) open an account with any other bank of my choosing. But I don't want to jump ship and lose out on having a Visa debit card. It actually saves me money, as for example if I use it to pay at the supermarket I'm only taking out what I need, rather than withdrawing money from a cash machine and having the change in my purse. And obviously it's pretty much essential if you're buying clothes from eBay, too. But no, I'm not interested in transferring the overdraft to another bank.
Makes sense when it comes to managing your finances. Reducing expenditure on things like 'Virgin Media' may also help.

And yes, I'm prepared to take any job. Over the past 12 months I've worked in a supermarket, in the packing department of a factory, and as a private tutor for GCSE & A Level English & History students.
Any reason why so many jobs? Do you hit out at people trying to assist at work too?

Thanks for your reply, opinions4u. However, if I wanted to be patronised, I would've stated as much in my original post.
Your post seems to imply that banks charging interest on money lent to you is unfair. While not brilliant, the rate you are being charged is market norm. Sorry for not offering tea and sympathy.

Although with hindsight, the fact that they gave someone with no income or guarantee of any in the near future £1,600 to play with seems rather sinister/foolish.
Perhaps banks should withdraw all interest free facilities to students due to their sinister approach to this market segment.

As I quite clearly stated in my previous post, I've paid in sufficient funds to cover the payment on the day it was taken on previous occasions without any problems. I've also been told by Halifax staff that as long as the funds are there before closing there isn't any problem. So therefore the error quite clearly is down to Halifax.
If you have been given misleading information then you should, as I suggest, politely ask for a refund. The terms and conditions of your account are, ultimately, the bottom line though and funding the same day doesn't work.

Tell me something I don't know. :rolleyes: They're relying on my money as much as I'm relying on theirs, as they're making £250 - £300 a year from me as long as I remain a customer (with an overdraft).
You may have a problem if they demand repayment of your overdraft on demand though. While I appreciate your income is currently low, I still suggest bringing down the debt at the earliest opportunity to mitigate future interest charges and to reduce the risk of being asked to find £1,600 immediately. Make sure you know when the annual review on your overdraft is, as this date may bring you an unpleasant surprise.

As for the charge itself, a polite phone call asking for a refund will be successful if you've never been charged before. Don't allow charges to build up on charges though.

dunstonh

Thanks for your reply, opinions4u. However, if I wanted to be patronised

I didnt see it is patronising. It was explaining the situation as your first post came across as if you didnt understand why you were getting charged. O4U also posted the important bit of asking them to refund the charge as it was your first error. Most banks will on the first time if you ask nicely and it was a genuine mistake. Get rude with them and its unlikely they will. The person agreeing this (or not) is only human and will respond better to a nicer request.

Although with hindsight, the fact that they gave someone with no income or guarantee of any in the near future £1,600 to play with seems rather sinister/foolish.

They didnt force you to take the money so whilst they were happy to give it, you were happy to take it. It takes two to tango and in this case it can be seen that they were foolish to lend it and you were foolish to borrow it.

That bit is patronising somewhat but you do seem to have a chip on your shoulder about this and perhaps a bit of patronising is what you need.

As I quite clearly stated in my previous post, I've paid in sufficient funds to cover the payment on the day it was taken on previous occasions without any problems. I've also been told by Halifax staff that as long as the funds are there before closing there isn't any problem. So therefore the error quite clearly is down to Halifax.

As has been posted higher up, you need to get the money in the day before. Often you will get away with paying in the same day but at some point that day, the person doing the checking and deciding to return items is going to have to draw a line and anyone not paid in at that time will find their entries bounced. On a quiet day, that may be late in the day. On a busy day, it could be early in the morning. If processing is behind you could find that even if you pay it in during the morning, it doesnt show until its too late. If you are cutting it fine, you should tell the cashier that its to cover an entry going out that day and if they could make sure that entry is paid.

Pippa_M

YorkshireBoy wrote: »

I don't see it as clearly as you do. Then again, I've read your T&C's...have you?
Lose the 'chip' before you ring Halifax to ask for leniency.

I doubt many of their customers have read and familiarised themselves with 28 pages of terms and conditions. I based what I said previously on personal experience. So technically yes, if they play hard then they have the upper hand. But one of their customer service assistants has contradicted their own T&Cs, which I'll be sure to mention if things get sticky. And I'm afraid you'll have to excuse me. I don't see how pointing out that a couple of sentences are condescending in the extreme equates to having a "chip".

opinions4u wrote: »

Reducing expenditure on things like 'Virgin Media' may also help.

Yet if it wasn’t for that expenditure you’d have missed out on two opportunities for self-aggrandisement already.

Any reason why so many jobs? Do you hit out at people trying to assist at work too?

Any reason why such piety? The factory job was contract-based – once the contract was completed, the job no longer existed. The supermarket job was a temporary position for Xmas, and by its very nature, tutoring is finite. Do you make a habit of replying to threads, completely ignoring the questions that were asked, and instead stating the staggeringly obvious in the most patronising manner imaginable?

Perhaps banks should withdraw all interest free facilities to students due to their sinister approach to this market segment.

Perhaps they should. After all, we’re all currently suffering a result of the banks lending money to people who can’t afford to repay it, are we not?

You may have a problem if they demand repayment of your overdraft on demand though. While I appreciate your income is currently low, I still suggest bringing down the debt at the earliest opportunity to mitigate future interest charges and to reduce the risk of being asked to find £1,600 immediately. Make sure you know when the annual review on your overdraft is, as this date may bring you an unpleasant surprise.

It would be against their best interest (no pun intended) to do so. At present, they’re guaranteed £20 - £25 each month. If they demanded immediate payment of the full debt, the upshot would be what, a county court settlement? From that they’d get what, maybe £1 per week and the interest frozen? That’s a net loss of £15 - £20 per month for them, plus the debt would gradually reduce too, whereas at the moment it’s pretty much fixed at £1,600 (or thereabouts).

opinions4u

Pippa_M wrote: »

I doubt many of their customers have read and familiarised themselves with 28 pages of terms and conditions.
You will be right. It's a shame that people don't take 10 minutes out to do this sort of thing, because it will give them a better understanding as to how they can benefit best from the way an account works. Not sure if they still do, but the T&Cs at Halifax used to have the 'plain English' crystal mark on them.

One of their customer service assistants has contradicted their own T&Cs, which I'll be sure to mention if things get sticky.
That is fine when dealing with the Halifax and you would probably get the benefit of the doubt. I wouldn't recommend testing the theory in court though as what is written down will take precedent - so relying on that for a challenge could cost you 6 years of a bad credit rating.

And I'm afraid you'll have to excuse me. I don't see how pointing out that a couple of sentences are condescending in the extreme equates to having a "chip".
I'll excuse you. But you don't do yourself any favours.

Yet if it wasn’t for that expenditure you’d have missed out on two opportunities for self-aggrandisement already.
Okay, may be I responded to your 'chip' there. It's amazing the number of people who would prioritise an expensive TV/telephone/internet package as a more important expenditure than maintaining/reducing their unsecured debts though.

Any reason why such piety? The factory job was contract-based – once the contract was completed, the job no longer existed. The supermarket job was a temporary position for Xmas, and by its very nature, tutoring is finite.
Again, a response to your 'chip'. As has been repeated by others, anything other than a well balanced request for your £35 back will get a response that you don't want.

Do you make a habit of replying to threads, completely ignoring the questions that were asked, and instead stating the staggeringly obvious in the most patronising manner imaginable?
In what way did I not answer the questions raised? I answered most of your points. One that I didn't answer was "would they accept £10 a month?". My guess is that they wouldn't and probably shouldn't. But I think it's unlikely that you will get an accurate answer to that question on an internet forum. The only people who can tell you are the Halifax themselves.

Perhaps they should (stop providing interest free overdrafts to students). After all, we’re all currently suffering a result of the banks lending money to people who can’t afford to repay it, are we not?
You've just alienated any under-graduates reading. You're good at this sort of thing aren't you!

It would be against their best interest (no pun intended) to do so. At present, they’re guaranteed £20 - £25 each month. If they demanded immediate payment of the full debt, the upshot would be what, a county court settlement? From that they’d get what, maybe £1 per week and the interest frozen? That’s a net loss of £15 - £20 per month for them, plus the debt would gradually reduce too, whereas at the moment it’s pretty much fixed at £1,600 (or thereabouts).
Or they may just view your approach to your finances as high risk and if you default sell you on to a debt collection agency and register the appropriate paper work at the County Court. If you really want to pursue it that way, that's your call. But there are consequences of building up a poor internal record with your bank (which failing to fund your account in good time will do) and bigger consequences of allowing your credit file to deteriorate.

Try to look at the bigger picture.

Failing to fund your account in time will get you £35 charges which will hurt.

These could lead to Halifax calling in your overdraft (or not renewing it when the 12 months is up) - which you have already stated you couldn't afford to repay in full.

This will put you on to their internal debt management system.

If you fail to agree to their terms within this, or break any agreement, they will ensure that this is recorded on your credit file.

This will stay with you for 6 years.

A bad credit file can impact your ability to gain employment in certain fields, affect your ability to get credit (including mortgage) or significantly increase the cost of that credit. Or simply restrict you to a pay as you go mobile when a contract would be cheaper.

You can feel patronised by me if you like. But these are real issues that you need to address in your life.

I'm not important. You taking responsibility for and control of your financial wellbeing is.

jamesd

Pippa M, they may accept not charging it this time but whether they do or not you should really try to get the used amount of the overdraft down to far enough below the limit so a direct debit would only take you up to the limit. Otherwise it'll just happen again and eventually they won't remove the charge.

It's worth discussing your situation with one of the debt charities because your income is too low to make that debt really affordable and they may be able to arrange to suspend interest and give you some chance to reduce the debt.