MSE News: HBOS 'High Interest' customers to earn zero interest

rb10

JimmyTheWig wrote: »

Yes, it's time to switch.

Tend to dip into overdraft from time to time, mainly for small amounts. Figure it's easier to do this and pay a few pence in interest than to transfer money out of savings to cover it. But there's no way I'm paying £1 a day for the privilege (sp?).

Already have A&L and Abbey accounts, so looks like First Direct is the answer. 0% buffer means I should save money, plus there's the £100 bonus on offer.
Before I head off to their website to apply, does anyone know if they ever do cashback for this?

Or try to keep out of your overdraft? If it's only for small amounts, you should be able to re-organise your spending so that you don't dip into it. Remember if you're overdrawn for up to five days per month, it's effectively free (as the £5 reward cancels it out).

JimmyTheWig

rb10 wrote: »

The '£14,700 salary' bit is also misleading for...

Yes, there's various cases where this isn't the case, but in general this is what would be needed. This is dealt with to some extent on the main article, for which there is a link from this news story, but the way it is stated is the simplest for most people.

JimmyTheWig

rb10 wrote: »

Or try to keep out of your overdraft? If it's only for small amounts, you should be able to re-organise your spending so that you don't dip into it. Remember if you're overdrawn for up to five days per month, it's effectively free (as the £5 reward cancels it out).

I agree that that would be an option, and obviously what I would do if there were no alternatives. It's just convenient to have it there for when things crop up.

Ruseph

I just got the letter on the High interest account change this morning.
I had looked into the reward account, but at the time decided not to change, as I thought that the daily charges could ammount into massive debt if I ever got on the wrong side of having a job. £5 daily charge for nauthorised overdraft amount to £1800 a year, but obvioulsy not likely to happen for all year.

I haven't read all the small print on the reward account, but I think it only pays the reward for each month you pay in £1000 and are in credit? so for those of you above that mention offsetting the £5 per month reward against the occasional overdraft use, may be dissapointed, if not annoyed. as you might lose the reward and still pay the daily £1 for overdraft use.

I think I might look elswhere for a different account.

jambosans

Ruseph wrote: »

I haven't read all the small print on the reward account, but I think it only pays the reward for each month you pay in £1000 and are in credit? so for those of you above that mention offsetting the £5 per month reward against the occasional overdraft use, may be dissapointed, if not annoyed. as you might lose the reward and still pay the daily £1 for overdraft use.

With the Reward Current Account if you receive £1000 or more in a calender month, you receive £5 net the following month. You do not have to be in credit to benefit from the Reward payment.

If you have anymore questions, I suggest reading this guide beforehand, as it will clear a few things up:-
http://forums.moneysavingexpert.com/showthread.html?t=1986907

Managainsttheworld

I am a halifax customer and have also received this letter. I find this an absolute disgrace.

I have never been outside my arranged overdraft and have never had a missed payment so will not benefit from the cancellation of these charges.

I use my overdraft most months and since being made redundant I am spending more time over drawn than before.

The Halifax have stated this is for 'simplicity' but I only see this as a way of punishing those who use their account normally.

I sat down and thought about the APR. Seeing as going overdrawn by £1 for one day in a year will result in a fee of £1, by my calculations this is 100% APR. Not good.

So I had a look at some other figures. If I stayed overdrawn by a constant £1500 this would cost me £365 for the year which is 24% APR or if I was £2500 overdrawn for the whole year, I would pay 14.6% APR.

I may have got this all wrong but it seems to me that once I naturally enter my overdraft, I should withdraw the whole thing to reduce my APR and earn some money elsewhere.

Just have to make sure I transfer money back before any direct debits hit.

JimmyTheWig

Managainsttheworld wrote: »

I sat down and thought about the APR. Seeing as going overdrawn by £1 for one day in a year will result in a fee of £1, by my calculations this is 100% APR. Not good.

I agree that this is not good.
However, I think it is worse than this. Much worse. You are only overdrawn for a day in your example. APR is about the cost of borrowing for a year.
So the APR is in the region of 36,500%. Yes, that's thirty six thousand percent!

Managainsttheworld

Sorry in my previous message I said I would take out any credit funds. This was due to my brain being incensed.

Of course I wouldn't take the credit funds out as that would mean overdraft charges for longer.

What I meant to say was that as soon as I naturally go into my overdraft is to take as much as I can out of it, put it in a high interest account and transfer the money back into my current as and when I need it.

scratch339

Also received our letters about this today (why they send my wife and I seperate letters for the one joint account i dont know..)

Only been on this account for 18 months after they effectivly closed the last standard bank account i had by changing the T&C to 'useless'. Seems they got bored of paying high interest and are playing the same game again!

Initial anger at this turned to practicality and working out what this would actually cost me.

A quick scan of the last 12 months bank statements show that:

Interest credited = £20.93
Interest debited = £9.51
So i gained £11.42

Under the new system, i was overdrawn for a total of 34 days so would have been £45.42 worse off over the year.

Sounds like a really good idea...:mad:

Time to pack up and sod off to another bank!

A&L seems best but i already have a std CurrAcc that i use formy 'spending money'

Lol just as im typing this ive switched over and seen :money: on countdown.

:beer:

JimmyTheWig

scratch339 wrote: »

A quick scan of the last 12 months bank statements show that:

Interest credited = £20.93
Interest debited = £9.51
So i gained £11.42

Under the new system, i was overdrawn for a total of 34 days so would have been £45.42 worse off over the year.

This might work out ok for you. Assuming you pay in £1000 a month to this account you could change it to the reward account where you get £5 credit every month.
So over the year you would have had
Monthly credits: £60
Overdraft charges: £34
So you would have gained £26.