Overdraft Recall - Scaremongering?

andytashfidget

Hi All

Im new to the forums. Just wanted to pick you brains really!

Hubby and I live on a fairly tight budget (same as everyone!), but since I qualified from university just under 2 years ago, we've been making a concerted effort to pay back our rather large overdrafts. We bank jointly with Lloyds TSB and over the past few months they've made a few jibes about our joint overdraft. We went in for a meeting today about their changing overdraft fees, only to be pressurised into taking out a personal loan to pat back the ovedrafts. Their reasoning for this is that the government are supposedly changing the banking code to impose that no-one can have an overdraft over £500 and anyone that does will be made to repay it in the form of a personal loan as they will also be setting new rules to mean the same for credit cards! My husband has his own account with Natwest, who haven't said anything about this. Just wondered, are Lloyds scaremongering to get us to take out a loan or is this true? The very nice advisor kindly scoffed at us when we said we don't have the spare cash for one of Lloyds lovely, expensive loans lol!! They don't seem to care about the fact that in 18 months we've reduced our overdrafts by £2000 through sheer hard work and saving!

Anyway, rant over lol! Any feedback would be gratefully received! With our first baby due in a couple of months this has caused quite a lot of stress that I just don't need at present!

Thanks

Tash

PasturesNew

£2000 in 18 months between two though is just £55 a month each.

Have you done an SOA to see where you could make savings? You might think you live on a tight budget, but others might view it as extravagent/unnecessary.

Are their loans more expensive than an overdraft/fees?

Mikeyorks

andytashfidget wrote: »

Their reasoning for this is that the government are supposedly changing the banking code to impose that no-one can have an overdraft over £500 and anyone that does will be made to repay it in the form of a personal loan

They're talking tripe. But as they can call in the overdraft at any time it suits them (and when it probably least suits you) ..... the loan may be a preferable way to force you out of the overdraft.

Quite a few posts on here from people who've had the entire overdraft withdrawn - and been refused a loan.

Consumerist

andytashfidget wrote: »

. . . and over the past few months they've made a few jibes about our joint overdraft.

How have these "jibes" been made? In writing or over the counter?

You might be sensible to regard these "jibes" as some writing on the wall and start looking at how you would deal with a withdrawal of the overdraft facility if that should happen. Now might be a good time to prepare for the worst and don't just hope for the best. You can get some help on the MSE Debt Problems page to see how you would cope. Have a look at the Debt-free Wannabe board to see how others have coped.

How, for example, do the bank's monthly overdraft charges compare with their loan charges? Could you get a cheaper loan elsewhere?

Don't wait for the worst - plan for it.

andytashfidget

Thanks for your replies. I have been thinking just that - are they going to eventually (sooner, rather than later) remove our overdraft facility? We had a face to face in July - they assured me taking on their Platinum Accoun was the answer as this would reduce our overdraft interest, while saving us our current payment on RAC cover (it comes free on a Platinum Account). Fair enough, we went with this. We were called in today as the bank phoned on Monday and said they'd like to tell us face to face about this extra charge they're going to be adding to all overdrafts - £5 a month. We were quite surprised when the advisor started talking about the government imposing new rules on overdrafts and credit cards. I do understand that personal debt is an issue for this country, but it did seem a bit draconian.

Im not sure where to go with this. The overdraft in question is large for an overdraft (£2400) but very small in terms of good finance for personal loans. We currently pay a fee of around £12 a month or so, plus £5 a month extra charge for all overdrafts - so that will make it £17 - no problem. We do have a household budget which I have combed over to try and make savings, however, I don't want to make any more financial commitments with a baby on the way (i.e a loan). We need our spare money for childcare from next summer. I don't expect anyone's sympathy, just some sound advice would be fab. We know we have some spare money to make payments on the overdraft for the next 9 months, which would reduce it a lot but not clear it completely, however, do you guys think it's prudent to simply continue paying off the overdraft via the bank or to opt for a credit card and do a money transfer (I detest the idea of this, but nevertheless feel a bit backed into a corner)?

Thanks

Tash

Consumerist

andytashfidget wrote: »

Im not sure where to go with this. . .

If you have a good credit record, an option you might want to consider is to apply for a so-called super balance transfer credit card which allows you to transfer a balance from their card to a current account at 0% interest for about a year. There is a transfer fee (3% - 5%) but no further charges for the duration providing you pay at least the minimum payment on time every month.

Fiddlestick

andytashfidget wrote: »

Their reasoning for this is that the government are supposedly changing the banking code to impose that no-one can have an overdraft over £500 and anyone that does will be made to repay it in the form of a personal loan as they will also be setting new rules to mean the same for credit cards!

Sounds like rubbish to me.

simax

andytashfidget wrote: »

Their reasoning for this is that the government are supposedly changing the banking code to impose that no-one can have an overdraft over £500 and anyone that does will be made to repay it in the form of a personal loan as they will also be setting new rules to mean the same for credit cards!

Oh my God! Surely that kind of lie-telling in the banking industry must break some sort of code?

Disgusting behaviour. As soon as your O/D is clear, move banks ASAP. Shocking!!:eek:

Fiddlestick

simax wrote: »

Oh my God! Surely that kind of lie-telling in the banking industry must break some sort of code?

Disgusting behaviour. As soon as your O/D is clear, move banks ASAP. Shocking!!:eek:

I'd go as far as saying it's one of the more legitimate cases of mis-selling I've seen on here.

marklee

andytashfidget wrote: »

Their reasoning for this is that the government are supposedly changing the banking code to impose that no-one can have an overdraft over £500 and anyone that does will be made to repay it in the form of a personal loan as they will also be setting new rules to mean the same for credit cards!

Absolute tripe. How would anyone pay for tvs / sofas / plane tickets / hotel bills?

However the employee may well have been trying to scapegoat the government when there is in fact an underlying issue that Lloyds may not be prepared to lend you over £500 in future. As the others on here have said... you need to plan to reduce your OD now.

SusieT

I opened a dofferent bank account for my everyday needs and changed my Lloyds account to a Platinum one as it almost halved the interest charged. The charge is not much difference but for the same payment each month from me I am significantly increasing the amount the overdraft reduces so will be paying it off earlier.
Interest on the Platinum account is 10% so there is a big saving to be had if you are organised and want to clear it.