Halifax Overdraft New Charges

ginafryer

I had to join here today cos I need to vent how extremely angry I am at the fact I received a letter this morning from Halifax detailing the new ways in which overdrafts will be charged for.

I have an arranged overdraft on my account and as many people are Im pretty much always in it, especially now Im on maternity leave (the amount you get is lower every month but the bills stay the same, great isnt it!)

I was paying between £5 and £7 a month for being in my overdraft which I thought was acceptable, I didnt think I should pay its arranged but what can you do?

The letter today said they were making it simpler to charge on overdraft usage and the new cost would be simply £1 per day
Thats £30 a month for the overdraft facility!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Who do they think can afford to pay this????????????
Especially with the whole recession going on!!! They know people dont have alot of money and they go and do this!!!!!!

Im so angry I cant say.

Has anyone else got this letter? Any ideas what to do?
I applied to HSBC (cos my husband is with them) but I dont know if they will a) accept my application and b) give me the overdraft I need.

If they dont Im in huge trouble! I cant afford to pay £30 a month and I cant afford an extra £200 to get out of my overdraft!

rb10

Have you seen this thread: http://forums.moneysavingexpert.com/showthread.html?t=1986907 ?

You need to get out of your overdraft. It's not your money, and remember that even if you get an overdraft with HSBC, they can ask for it all back at any time. Where would that leave you? Once you can get yourself in credit (at least for most of the month) then you'll find that, with the £5 reward, the account actually pays you a lot of money over the course of the year.

It might be worth posting on the Debt Free Wannabee board, to see how you can get this debt cut down asap.

Alternatives include getting a credit card with a 0% offer (Halifax do one for 12 months). Put all your spending on here, so that you can concentrate on paying off the overdraft asap. Then, you can work on paying off the credit card. Remember that you won't pay any interest at all on the credit card for 12 months (provided that you make the minimum repayments).

Or, if you already have a credit card with Halifax, you can transfer your overdraft debt to that credit card. That way you avoid all the £1/day charges (although will still have interest on the credit card). You need to go into a branch and speak to someone to do this.

blued

I received the same letter and am also annoyed at the new overdraft charges. There is a thread about this that is worth reading through - http://forums.moneysavingexpert.com/showthread.html?t=1986907

I think I'll be changing to First Direct (part of HSBC group) as they offer an interest free overdraft up to £250 and give me £100 for switching (there is a minimum amount to be paid in each month though - £1500). There is also Alliance & Leicester but they only give you 0% for the first 12 months and thereafter it is £0.50 per day you are overdrawn I believe.

You'll definitely find another bank that offers an overdraft charged by interest instead of a fixed fee. Unless you have a big overdraft and are often using it you will be worse off with these new fees.

rb10

blued wrote: »

You'll definitely find another bank that offers an overdraft charged by interest instead of a fixed fee.

And the big question here is, as the bank charges test case continues, how long before the other banks start charging in the same way as Halifax now is? I fully expect us to see more banks change the way they charge for overdrafts in the coming months. If they are prohibited from charging £35 for going overdrawn, then they will need to find another way of getting that income. It could be that you are going from the frying pan into the fire.

This is why a more sensible long-term way of approaching this is to take a step back, and ask why am I always/often overdrawn, and how can I get out of this debt? Remember, as I said in my previous post, any bank can withdraw your entire overdraft immediately, so being reliant on it is a very dangerous position to be in, it's asking for trouble. Much better to get yourself in credit (remember that the first five days of overdraft are effectively free at Halifax, so you don't need to be in credit for the whole month.

blued wrote: »

Unless you have a big overdraft and are often using it you will be worse off with these new fees.

No. If you are in credit for the whole month (or overdrawn by up to five days over the month), then you will get up to £5 paid to you each month. This is definitely not 'worse off'. I don't know of any other bank that is so generous.

heppy23

On the current account (the new name for the high interest current account, they are not paying credit interest or the £5 reward).

I suppose they are banking on people too lazy to make a switch to the reward account. As far as I can see in the info that came today they do not suggest making the change to reward account.

blued

rb10 - I agree that if you keep your account in credit every day you will be better off due to the £5 per month credit. However if you use your overdraft and pay less than £30 per month in interest charges you will be worse off. There are no 2 ways about it. It's all well saying that people need to get out of their overdrafts and it's not their money but for thousands of people this isnt that simple. An overdraft is a service offered by the bank for a fee (in most cases) and lots of people use this service. I can honestly say that I dont know anyone who has had a demand for this money back.

Maybe over time other banks will follow but it costs nothing to change bank. First Direct and A&L actually pay you £100 to switch to them. At the end of the day there will always be a bank offering a better deal than another bank. That is how they get their customers. When the unfair bank charges came about people started claiming money back some people started to say it would be the end of free banking. Monthly charges would appear for all banks. However all a competitor would need to do to get a lot of custom is offer a free account. So regardless of whether some banks charge something similar I think there will always be somewhere you can go that will be cheaper.

Just out of interest do you work for Halifax or part of their group? You seem to be keen to put people off changing to other banks or using other Halifax services (credit card) to move their money out of overdrafts.

rachelkate

I had the same letter today and rang Halifax - cancelled some DD's and SO's to help me and lo and behold it seemed that i got the letter because they want to upgrade me to a £12.50 a month account with loads of 'benefits'. Had this sales pitch at least 4 times in the bank at the desk and on the phone so i told him no chance. I'm trying to get out of debt, not pay for a bank account which i don't need any of the 'benefits' at present. told them i'm looking for a new bank. it's disgusting. so i have to clear £900 off my overdraft before dec 6th i think or change banks prior to this.

PurpleSue_2

If you do not live on overdraft and pay in £1K per month, then you are eligble for the 'Reward' account. But you have to contact them. Hurry - if you do it now, and not when it comes into place(6th Dec) you are £10 up.

Spread the word!

withnell

ginafryer wrote: »

I was paying between £5 and £7 a month for being in my overdraft which I thought was acceptable, I didnt think I should pay its arranged but what can you do?

Do you seriously expect to be borrowing the banks money and them not charge you anything for it? They're a business, not a charity!

MDE

withnell wrote: »

Do you seriously expect to be borrowing the banks money and them not charge you anything for it? They're a business, not a charity!

Sorry but what a stupid response. People do pay for their overdraft- interest!

The issue here is one of proportion, someone in overdraft by 1p is charged the same as someone borrowing £1000!

opinions4u

MDE wrote: »

Sorry but what a stupid response. People do pay for their overdraft- interest!

The issue here is one of proportion, someone in overdraft by 1p is charged the same as someone borrowing £1000!

I think you've completely missed the context of the reply that you quote.

I was paying between £5 and £7 a month for being in my overdraft which I thought was acceptable, I didnt think I should pay its arranged but what can you do?

Each time I've read that I have interpreted as the poster believing it wrong that there should be any cost attributed to an arranged overdraft.