Banks cancelling overdrafts

jen_lyn

sluggy1967 wrote: »

I find posts like "only have yourselves to blame" patronising and unnecessary on a forum such as this. Rising fuel costs, petrol prices that went crazy a few months ago (and are creeping right back up), huge rises in staple goods (have you not noticed how much bread and potatoes cost now?) all mean that people on a small, fixed income are really struggling - better to use an overdraft than credit cards. If you have been fortunate enough to not need your overdraft, well bully for you, some people dont have that luxury, no matter HOW MUCH they cut their cloth.....

well said, some people just mis judge people. just because their not live in over draft.

bigbirdmoffa

I have three accounts with the sane bank, one that I work for!!!! I am off on longterm sick having had surgery for a shoulder injury and Friday I go in for surgery on my knee. Of these accounts I have two overdrafts which have always never been used, they were 'given' to me. Now I am in financial trouble they have let me use them and then recalled them. Bearing in mind I am staff I feel sorry for the non bank people out there!!!!!

kenzo1_2

Hey everyone lets get a bit real here, we are in a credit crunch, major threat of loosing your job and the country in free fall, yes i know things are expensive but come on if you cant afford to shop in Sainsburys go to Aldi, and if you cant afford there go to the market or something, or buy the supermarkets sub brands. I have an overdraft i dont use it, i think it is £500, i have 3 kids an average job, mortgage and the like, but if we cant afford things we dont have or buy them. Reading these threads of people having a £10k overdraft, god how can you live like that, its the banks getting real with you and hopefully real with yourself.

ahai1

The facts are that people who live in overdrafts are a risk to the bank. The people who routinely abuse overdrafts instead of doing that in many cases they should look at their budgets and other stuff. The person who I know abused it routinely lived with her mother and liked to party and buy expensive stuff and the I don't see why the bank should have to pay for her life style.

For all of you who are thinking that the money is there just remember that the money you give to the bank get's given to other people in overdrafts and if that money is not reclaimed then the taxpayer will have to bail the banks and building societies out.

I am not a big fan of the banks but I do believe that the customers are to blame. The credit crunch was due to stupid lending practices and stupid customers taking out mortgages they could not afford.

I am not trying to pick on anyone but how many of those people who abuse their overdrafts (that is what it is) have seen someone about managing their money? Answer very few and instead take the easy way out.

The staff who work in banks in the majority of cases are not well paid and work in jobs where they have to deal with people who cannot do anything for themselves and have to explain to someone on a number of times on a given day how to operate a bank account which a 5-year-old could do. I was once in a queue next to someone who wanted to take out £200 but could not be bothered to use a cash machine and someone who once was told what BC and BACS stood for and how to do very simple tasks.

Well said Kenzo1. Also people should have saved for a rainy day. I always have some savings just in case I need it.

If people were to be allowed to borrow on overdrafts then people will be looking at the bank books and say that those people are a bad risk and should have never been given money in the first place. The reality is that the banks have to lend to people who can pay back.

*MF*

@ Paul_Herring ... I appreciate that I appeared "precious" lol, not my usual characteristic, but was for a purpose.

*********************

On topic:

My posts have centred on what may or may not be "responsible lending", and I have called into question the granting of overdrafts on that basis.

Without repeating my earlier posts, may I explain why.

It takes little knowledge to be fully aware that Banks, and others, worldwide have engaged in practices that have caused a financial crisis, one that has spread to the real economy, and one that has required very significant taxpayer involvement in re-capitalising the banks - so in a very real way my questions start there - and "trickle down" eventually to the question of overdrafts.

So let's start there - were the practices of Banks which have led to the worldwide credit crisis and have necessitated significant taxpayer support responsible? I think the answer is a resounding no!

The central consequence is the need to re-capitalise the Banks, and as another poster has pointed out, the granting of overdrafts (even if unused) has to be taken into account in a Bank's balance sheet, and capital set aside to cater for those overdrafts (repeat - whether the overdraft is used or unused).

There appears to be increasing evidence, (and it probably prompts MSE's two Threads on the subject - which is MSE evidence gathering) - is that Banks are increasingly recalling such overdrafts as part of their efforts (of necessity) to improve their balance sheets.

Historically, imho, both customers and Banks, have become too relaxed in past years over the exact nature of overdrafts, specifically the "recall on demand" feature. Were that not the case, I suggest we would not have seen the granting of overdrafts, particularly those unrequested by the customer, but offered as part of a package, often marketing led - ie., used as a feature to gain market share.

I feel that relaxed attitude is now under severe questioning (and stress) - and can now be seen more clearly as neither in the Banks nor the customers interest ...

- unless both are fully satisfied that any amounts granted as an overdraft facility can be repaid on demand, in full and at any time such demand may be made.

It remains my opinion that unless that strict criteria can be met, lending on that basis can be viewed as less than responsible.

May I suggest that evidence to support that opinion may be growing - and that over time the relaxed attitude many have had over both the granting and the use of overdrafts will alter - imo - radically.

Step 1: Banks will increasingly recall and/or reduce overdrafts.

Step 2: The granting of overdrafts, particularly for largely marketing advantage/purposes will decrease.

Step 3: Both Banks and their customers will better understand the real nature of overdrafts.

I may be wrong - it is only my opinion

- but I think lessons are being learned, some harsh, some painful, but nonetheless important

- and they all centre on the question of lending or borrowing - responsibly.

dobermanpurple

I'm with Nationwide. I claimed financial hardship with £2000 of bank charges, we are really struggling. I got a letter saying they had reviewed my case and decideed i am not in hardship even thoughh my basic credit card re payments and my bills are £20 more than my earnings. In the same post i had a letter from them saying in 4 weeks time they were removing my £1400 overdraft. After a tearful phonecall they agreed to reduce it by £20 a month instead which i am much happier about. no one wants to be in debt but the banmks really dont help you out. Bank charges helped to get me in this posistion in the first place

OrkneyStar

Lokolo wrote: »

Overdrafts are not longterm, that is what loans are for. Overdraft can be removed at anytime.

If you are constantly in your overdraft then surely you should think about paying it off with a loan and think about how to budget properly?

I agree with this sentiment although not necessarily paying off via the loan option. What about opening a new account...keeping in the black, and setting up a sensible plan to pay off O/D on old account ?
TBH I used to have HBOS trying to increase my O/D and always said no. I once had a £10K O/D for a couple of weeks but this was arranged in branch as I was due this amount from an investment payment, but it was delayed for a little while. They wanted to put it down ro £3K but I said 'no thanks', £100 would be more than fine! This was 3 years ago of course when the banks were throwing credit out!
It is true they can take an O/D away or reduce it, in all honesty if you still have an O/D you should be trying to reduce it (even by a little) each month with the aim of having it only for emergency use, not every day!

Justamum

ahai1 wrote: »

I am not a big fan of the banks but I do believe that the customers are to blame. The credit crunch was due to stupid lending practices and stupid customers taking out mortgages they could not afford.

There's a big contradiction in here. The banks were the ones who lent the money to the customers - silly multiples of salaries for mortgages - because they were coining it at the time. Suddenly it's all come back to bite them on the derrier.

ahai1 wrote: »

The staff who work in banks in the majority of cases are not well paid .

Agreed. The 'indians' don't get paid high salaries but the 'chiefs' get paid a small fortune, then get huge bonuses (whose money is that - the customers'), and a nice fat pension when they retire. They've been feathering their nests for far too long, get into trouble, and the taxpayer (those people who are struggling) have to bail them out, and STILL they get their bonuses and pensions!!!

ahai1 wrote: »

Well said Kenzo1. Also people should have saved for a rainy day. I always have some savings just in case I need it.

Bully for you. Pat yourself on your sanctimonious back. There are plenty of us who can't save because we don't have enough of an income to do that.

ahai1 wrote: »

If people were to be allowed to borrow on overdrafts then people will be looking at the bank books and say that those people are a bad risk and should have never been given money in the first place. The reality is that the banks have to lend to people who can pay back.

Perhaps they should have thought about that before lending the money in the first place without proper checks (self-certification is hardly the way to go is it?) The people who borrowed the money didn't go in with masks on and guns in their hands demanding to be lent money. The banks could always have said 'no' or lent sensible amounts. Perhaps if they'd stuck to the 3.5 times salary for mortgages for instance, then we wouldn't be in the situation where it costs a quarter of a million pounds to buy a house the size of a garden shed.

elliephantus_2

We pay interest on our overdrafts so its no different to a short term loan, I wonder why some members consider using an overdraft as abusing the banks, overdrafts are not free and therefore banks are earning from them!

MLisking

ShelfStacker wrote: »

The problem is that although someone can score for an overdraft (they're exceptionally easy to get, far more so than credit cards or even structured lending like loans) people are much more likely to misuse them - as ahai neatly said, they get seen as "free money".

The problem also is partly on the bank's side - they still seem to score on the basis that overdraft facilities are for occasional use to maintain cash flow (e.g. drawing against cheques before they're cleared, making payments in advance of funds being deposited) whereas the public perception is that, again, they're free money for use when they're a bit short. Which is why we have so many people up to the hilt in thousands of pounds worth of overdraft facilities.

The other thing is that overdrafts are by their nature very hard to pay off if you haven't got all the funds to hand - it requires an incredible amount of willpower which many people simply don't have. It's all very well to insist on "regular payments", but ODs are meant to be paid off in one fell swoop rather than over a period of months - they're not designed for that.

I don't mean to be rude, but I think some of the things you have said are incorrect. My husband earns £1400 p/m. He pays every single direct debit on time. He asked for just a £200 o/d to just cover anything at the end of the month. Did HSBC give it to him? NO. Instead, we are left with him having to withdraw money anyway and then get charges slapped on instead.

It's okay though. Soon enough, vengence for the consumer will be ours, and all those disgusting charges will be given BACK. Its almost like a twisted savings plan :rotfl:... and I will be having a lovely holiday on the back of your employer... so cheers.