Halifax Reward Account

ace1964

Hi, My nephew has been a customer of the Halifax since he left school some 7 years ago. He has had his wages paid in every month. He has an overdraft of £400. He recently went into the bank to ask for an increase in his overdraft. He was turned down flat and instead they signed him up for the reward account with a monthly fee of £12.50. He regularly uses his overdraft to the limit and obviously incurs their charges for every day over £300. The real point to this thread is that i consider he was mis-sold this account as he does not earn £1000 per month and never has done. Is there anything he can do to reclaim his payments and get out of this account?

jambosans

ace1964 wrote:

Is there anything he can do to reclaim his payments [...] ?

No.

ace1964 wrote:

Is there anything he can do to [...] get out of this account?

Yes, he can downgrade at any point, however I would read on as it may not be in his best interest to do so.

You're clearly confused. If your nephew pays £12.50 per month he has the Ultimate Reward Current Account. You can earn £5 Reward per month on this account if you fund £1k or more (per calendar month), but it's not a requirement. Your nephew pays for the accounts various insurances and, more importantly, the fee free £300 overdraft (which I'd assume is why he was sold the account). If your nephew can stay within the fee free £300 he will save quite a bit in monthly overdraft fees. Going above this is an extortionate type of borrowing, and I would advise against it.

From what I've read, your nephew has not been mis-sold (the basis of your argument is irrelevant, this account does not require the aforementioned funding requirement).

Small overdraft + regular use (i.e. greater than 13 days in a month) = Ultimate Reward Current Account. If your nephew does not use the other benefits of the URCA, I would suggest he repays the overdraft and downgrades to the bog standard Current Account. If he can't repay the overdraft, then at the very least get him to stick within the fee free £300 limit provided by the URCA (otherwise it doesn't matter which account he holds as he would be paying £1 per day regardless).

Halifax can work for your nephew if he's in credit, and moves £1k through the account each month (doesn't have to be a lump some, and can be transferred in and out straight away) by changing to the Reward Current Account. They are not an overdraft friendly bank, and if your nephew requires a line of credit he may be better off taking his business elsewhere (or consider saving, a credit card or loan).

My advice:

1. Get him to live within the £300 ASAP meaning he will be paying £12.50 max per month for overdraft usage.
2. Get him to open a savings account and setting aside a set amount each month with a goal to save up the balance of the overdraft.
3. Once overdraft amount has been saved, repay the overdraft and downgrade the URCA to a Reward or Standard Current Account.

Alternatives:
He could try opening a bank account elsewhere with overdraft, and use that overdraft to clear the Halifax account, which could then be closed. A risky option as your nephew would have to act financially responsible, and taking into consideration he wanted to increase an overdraft which charges £1 to use, I would argue he is not. It can be the cheaper option, but as I've said he would have to be disciplined to avoid running up another debt.

opinions4u

ace1964 wrote: »

Hi, My nephew has been a customer of the Halifax since he left school some 7 years ago. He has had his wages paid in every month. He has an overdraft of £400. He recently went into the bank to ask for an increase in his overdraft. He was turned down flat

As jamobsan's excellent post above states, Halifax is not overdraft friendly. It is an expensive place to run an overdraft of less than around £2000.

I'd suggest that he needs to take a closer look at his income and outgoings in order to get out of overdraft. He is spending more than he earns and being declined for an overdraft should actually be taken as a wake up call. I'd suggest he spends time on the Debt-free Wannabe part of this forum and less time spending money he doesn't actually have.

It could also be interpreted as the bank being responsible in not extending the line of credit to a low earner.

and instead they signed him up for the reward account with a monthly fee of £12.50. He regularly uses his overdraft to the limit and obviously incurs their charges for every day over £300. The real point to this thread is that i consider he was mis-sold this account as he does not earn £1000 per month and never has done.

It's the Ultimate Reward account that he now has. That doesn't require funding of £1,000 a month. Why do you think he has been mis-sold?

Having the account does mean that he gets the following:

- no charge on his overdraft, while it is less than £300 (saving £1 a day)
- mobile phone insurance (must be pre-registered, saves my eldest around £8 a month)
- world wide family travel insurance (could probably save a single bloke around £30-£40 a year)
- breakdown cover (usually costs around £40 and covers him in any vehicle, even if he isn't the driver)
- card protection cover (this can typically cost around £20 a year - not that I'd ever buy it!)
- If he can pay £1,000 a month in to the account (e.g. a £700 wage followed by a £300 transfer to a savings account and then straight back to the current account - it takes about 60 seconds a month) they will also credit the account with £5 a month.

I really think he his best maximising the benefits of the account and focusing on reducing his overdraft balance, rather than thinking about mis-selling. In the end, does he earn/save more from the account benefits than he pays out in £12.50 fees?

Is there anything he can do to reclaim his payments and get out of this account?

He can get out of the account by asking them to get him out of the account. It would be done within minutes and he would retain the same account details.

He will need to demonstrate that the account has been mis-sold if he is to be refunded any £12.50 fees. Can he?

(If he can show the account has been mis-sold, the £12.50 fees would be refunded, minus the value of any benefits he has used ... which I assume would include re-instating all the £1 a day charges he has avoided while being less than £300 overdrawn).

Jen151

As above i'd encourage your nephew to start seriously working on reducing his overdraft, if he can get it down to £300 or below, then he will benefit from the account, only paying £12 a month for it instead of £30 odd

He might be better moving bank altogether as Halifax overdrafts are not good value for money.

If you have a look in the Banking section of this site you can see what kind of account might suit him better for example how about this one



Alliance & Leicester. 0% overdraft & £100 bonus.
Top overall overdraft account, if you earn £6,050+

The Alliance & Leicester* Premier account offers a 12 month 0% overdraft, plus a £100 bonus if you switch to it and pay in £500/month, To qualify, you need pass its credit score, and use its 'Premier Switching Service' (which'll move your direct debits, standing orders and salary to it) within 11 weeks of opening the account.

You can bank online, or via a branch or telephone. However, this isn't open to anyone who has had an A&L, Abbey or Cahoot current account in the past three months (as they're all part of banking group Santander).

There's also free annual multi-trip European travel insurance for the account holder(s) which is great if it suits; yet it's not worth paying to upgrade if you need worldwide or family cover (read Travel Insurance).

In addition, anyone with an A&L or Abbey bank account can currently get a very strong credit card balance transfer deal: 0% for 12 months with no fee. See full details and how this compares in the full Balance Transfers guide.

After the first year’s 0%, A&L has a novel charging system: you pay 50p for each day you use an agreed overdraft, up to a max. £5 per month. This is quite cheap if you're overdrawn by £800+ but is easily beaten for smaller overdrafts. Don’t let this put you off switching for the 0% deal though, as that saving will dwarf future costs.




I cant vouch if they're any good am with Halifax/Bank of Scotland myself, but your nephew could do a bit of research and see what he thinks

Best of luck
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