Closing halifax account before repaying overdraft

dctrekkie

Hi

I've just transferred my bank account from the Halifax to the Alliance & Leicester due to Halifax's new overdraft fees. I'm almost ready to sign the form for A&L to close the old account, using their switching service, however they have now informed me that the only match overdrafts if you can show you've been in credit for at least 2 days in the last 3 months. Unfortunately my Halifax account is £2000 overdrawn at the moment, and there's no way I can repay it for a while. I've managed to build up £500-600 in the A&L account towards paying it off, and can probably add another £50 or more most weeks, but it will still take a while to get to the £2000, especially with the £30 overdraft fees each month.

I'd like to carry on and close my Halifax account, but what would happen with the overdraft? Would I have to pay it off in one go? Would I just pay the same overdraft fees each month until I pay it off, or are they likely to change it into some other type of debt and charge me more money? If I am charged the same overdraft fee am I better off paying as much as I can each week, or paying the minimum and putting the rest in a savings account until I have enough to pay off the entire thing?

I have no experience with this sort of thing so any help would be appreciated.

cifpower

You won't be able to close your account if there is an overdraft outstanding

opinions4u

I've just transferred my bank account from the Halifax to the Alliance & Leicester due to Halifax's new overdraft fees

£1 a day on a £2,000 overdraft is about the same as the old Halifax interest charges. I suspect you are no worse off for their change.

I'd like to carry on and close my Halifax account, but what would happen with the overdraft? Would I have to pay it off in one go?

The account will remain open until the overdraft is cleared. The usual charges will apply.

If I am charged the same overdraft fee am I better off paying as much as I can each week, or paying the minimum and putting the rest in a savings account until I have enough to pay off the entire thing?

While there's a logic to this, if you have a non-funded account they will, sooner or later, consider the account in default and pursue you for the debt.

You'd be better off making regular payments.

rb10

Make sure that you are getting the £5 Reward - you need to phone up and ask them to change over to the Reward account.

dctrekkie

Thanks for the quick replies

cifpower wrote: »

You won't be able to close your account if there is an overdraft outstanding

opinions4u wrote: »

The account will remain open until the overdraft is cleared. The usual charges will apply.

So what will happen with it, as I'm not paying my wages into it. (Don't you normally have to pay in so much a month?) Is there likely to be any additional penalty.

opinions4u wrote: »

£1 a day on a £2,000 overdraft is about the same as the old Halifax interest charges. I suspect you are no worse off for their change.

I think it still works out at £5-10 per month extra, plus it will stay the same until the entire things paid off instead of decreasing with the balance. As I mentioned above I've already got at least £500 to come off it.

rb10 wrote: »

Make sure that you are getting the £5 Reward - you need to phone up and ask them to change over to the Reward account.

Are they likely to do this when I'm not paying wages into my account?

cifpower

If you stop crediting the account there is a risk that the Halifax could withdraw your overdraft and ask for it to be repaid in full. Overdrafts are, after all, repayable on demand.

rb10

dctrekkie wrote: »

So what will happen with it, as I'm not paying my wages into it. (Don't you normally have to pay in so much a month?) Is there likely to be any additional penalty.

No penalty for not paying wages in, but be aware that if there aren't regular credits to the account they may ask for the whole overdraft back at any time.

dctrekkie wrote: »

Are they likely to do this when I'm not paying wages into my account?

You have to pay £1000 per month into the account to get the £5.

Probably worth having your wages paid into the Halifax account, that way you benefit by £5 per month, and this would also significantly lessen the risk of them recalling the overdraft straight away.