Overdraft Chaos!

CashSaver48

Hi,

Having a bit of a dilema this month and would like to get some opinions and tips/advice is available.

My partner recieved an letter in the post yesterday from HSBC (who she has her current account with) The letter was to inform her, that due to suitable spending rules they would be downsizing her overdraft from £1700 to £900... and this would take affect from the first week of April 2010.

We rely on our overdrafts to cover the monthly expenses. We bought our first house last year, so things are tighter than they used to be, but we've never gone over our overdrafts and generally have about £300 of the overdraft left at the end of the month.

Now my partner is hardly a spendaholic, never goes over her overdraft and has barely any debt apart from the mortage (shared with me) a credit card with under £1000 on it which she never misses payments on, and the remains of her student loans. Experian as her down as an excellent credit candidate.

So we're both a little confused as to why this would happen.
Of course she appealed straight away, ringing the bank up and asking why? and could she have this resinded and remain on the same overdraft limit.
They informed her that it would be passed on, looked at and that she'd get an answer back by tuesday or wednesday of next week.
Needless to say, she's worried. As if declined it would mean we essentially lose £800 off next months spending power.

My questions for you guys are:
Can the bank just do this without referral?
Is there anyway to get this altered?
Does anyone have any remedies for the situation.

Cheers,
Nick

onlypaddy

My questions for you guys are:
Can the bank just do this without referral?
Is there anyway to get this altered?
Does anyone have any remedies for the situation.

Yes, the bank can do this. It is in the T&C's that limits will be reviewed and changed if deemed necessary, it is part of the fabric of an overdraft. They can also recall the whole overdraft with the same amount of notice so you may have got off light.

The appeal may work, but otherwise you have to live with it.

My remedy for the situation would be to take this as a reality check and to start living in the black. I know it's easy to say, but if you ask for advice on the Debt Free Wannabe board (they will ask you to post your Statement of Affairs, or SOA) they will be able to single out areas of your spending habits that mean you are constantly living in overdraft...

The only remedy may be, tighten those belts!

karatedragon

CashSaver48 wrote: »

We rely on our overdrafts to cover the monthly expenses.... if declined it would mean we essentially lose £800 off next months spending power.

Then you are living beyond your means and not budgeting correctly. How would you have got on if you had never had an overdraft?

As far as I know an overdraft is designed for "casual borowing". For example if your car needs an urgent repair but then the overdraft is cleared by salary next month. They are not designed for languishing in months on end.

Overdrafts are also a privaledge (as are all lines of credit) despite what Experian "thinks" your score is. If HSBC decides that they no longer wish you to have this privaledge then they are within their rights to reduce or remove it totally. They also do not have to give you a reason.

Overdrafts are also repayable on demand.

Lokolo

Statement of Affairs you can do here:

http://www.makesenseofcards.com/soacalc.html

husemin

...one solution...If you are able to get a credit card that gives you cash back, do you monthly spending on this instead of using the bank. This way you get cash back on what you buy and you dont need to pay till a month after, so...
when your wage's goes into your bank you dont need to use it, just use this new card. (remember you may have direct debits in you bank account and these will stay the same, so some of your monly spending will be from the credit card and a little from the bank).
This will get you out of the red from the bank, then the next time you get paid from wages (in the black) you use this to pay off last months credit card spending.

Only do this if bank leave you no choice, itis easy to over spend, becareful.

H

vaporate

Banks can choose who they give the OD to but so can savers with their money. Cuts both ways.

I would seriously shake up and cut spending if you can. I would even say that the bank is doing you a favour. It is their money anyway no matter how you slice it.

miss_missy

husemin wrote: »

...one solution...If you are able to get a credit card that gives you cash back, do you monthly spending on this instead of using the bank. This way you get cash back on what you buy and you dont need to pay till a month after, so...
when your wage's goes into your bank you dont need to use it, just use this new card. (remember you may have direct debits in you bank account and these will stay the same, so some of your monly spending will be from the credit card and a little from the bank).
This will get you out of the red from the bank, then the next time you get paid from wages (in the black) you use this to pay off last months credit card spending.

Only do this if bank leave you no choice, itis easy to over spend, becareful.


H

hi

husemin the above would be a good idea if they werent overspending but by living in their overdraft they obvouisly are overspending and have to say dont seem to think of the overdraft as a debt but as potential spending money

cashsaver you really should think about trying to get to a point where your not using your overdraft to live off as already said yes banks can reduce your overdraft or even stop it altogether, what happens if next month they say to you both they are stopping your overdrafts? what would you do? i think lokolo is right and you should do an soa and people will help you budget so that you can pay back your overdraft and dont need to live off it, remember an overdraft is also debt and is costing you money every month
what is your OH take home pay? how much money is left per month once she pays the overdraft off? think of it this way if your OH wage is £2000 but she is using £1400 overdraft her actual money that she has each month is only £600 because the 1400 is actually debt however if she can get overdraft paid off and stop using it every month the whole £2000 is actually hers and thats much better
most of all you have to stop thinking of it as spending money as its not its a debt if your using it

karatedragon

Overdrafts and living in overdrafts is no longer cool.