Overdraft Recall - Scaremongering?

premierfella

Consumerist wrote: »

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.

Seconded. To illustrate with rough "back of an envelope" calculations over 1 year (assuming constant £2400 overdraft for simplicity):
0% Credit card with 3% fee = £72.
Staying with Lloyds on Platinum Plus and with new £5 overdraft fee: £484 (£60 new overdraft fees + £220 interest + £204 account fees).

Obviously the real difference is less as you almost certainly don't have a constant £2400 overdraft and you would have to add in the cost of buying the "added value" services you use with Lloyds Platinum such as the AA breakdown cover. You also have the hastle of refinancing whatever is left of the credit card balance near the end of the 0% period (net this off against the worry of having the overdraft cancelled). Still a significant saving though.

My additional advice is to transfer your current account to another bank if you think there is a possibility that you will still need a (substantially smaller) overdraft for emergencies as small overdrafts will become expensive at Lloyds TSB once the £5 per month fee comes in.

vaporate

Get shot of the overdraft asap.

magpiecottage

andytashfidget wrote: »

Hi All
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!/QUOTE]

The Banking Code no longer exists. It was a voluntary (i.e. not Government imposed) code for banks.

When banking became regulated by the FSA just under a year ago it was replaced by the Lending Code.

Lloyds TSB says it subscribes to the Lending Code.

One of the Code's key commitments says:

"Subscribers will make sure their staff are trained to put this Code into practice."

So it seems to already be in breach.

andytashfidget

Thank you everyone for your responses to my thread. Im quite disappointed but not surprised that Lloyds appear to be talking rubbish.

Having read your feedback and the advice pages on this site, we've decided to apply for one of these super balance transfers to clear the overdraft and then move to another bank. Im quite sad as Ive banked with Lloyds since I was 5, but I suppose that's not really relevant.

Thanks again!

Tash

powerone

One of my friends have previously banked with Natwest. They had an overdraft which was ookay ish. Natwest asked them to change it to a loan to help pay it off. Thats what they wanted to do, so all is okay. This was five years ago. I think its normal practice.

p00hsticks

marklee wrote: »

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

I'm not sure what your point is here - either you or I have misunderstood the alleged (and I think untrue) proposal.

You could pay for large purchases in the same way as always - by having the money present in your current account and using a debit card or cheque. There's absolutely no need to run up an overdraft just because you are making a large purchase....

powerone

natwest will match any overdraft upto £4,000 if required.

Just visit a branch and talk to them.

olly300

andytashfidget wrote: »

Thank you everyone for your responses to my thread. Im quite disappointed but not surprised that Lloyds appear to be talking rubbish.

Having read your feedback and the advice pages on this site, we've decided to apply for one of these super balance transfers to clear the overdraft and then move to another bank. Im quite sad as Ive banked with Lloyds since I was 5, but I suppose that's not really relevant.

Thanks again!

Tash

If another bank tells you information you are not sure of again and :
1. Take down the name of the person telling you that information
2. If the information is rubbish make a formal complaint in writing to the Bank. If the bank is not Santander they will look into it. This is so the person can be stopped.

BTW there is nothing wrong telling you to take out a loan to pay of your overdraft. There is in lying to you about false government legislation.