Livid. The bank and the teenager's overdraft

Inactive

If I were the OP, I would be " Livid ".

Livid with my Daughter for being so irresponsible.

jimjames

The problem we have is that everytime a case like this occurs there is a chorus of "stop the banks lending money to people irresponsibly" so we could get the government introducing a law that 18 year olds are not allowed to borrow unless both parents sign to agree to it (for example). If they did this then the tune changes to "nanny state stopping banks lending".

So this one person has frittered away the money that they've been lent by the bank. If banks were not allowed to lend it would also stop the responsible 18 year old who needed to buy a car to be able to get to a job where they would be earning £1000 a month and pay off loan in a few months.

JuicyJesus

I'm relatively young, don't live at home and have a fairly large amount of debt of about £5k (which I am going to be paying most off of over the next year with help from my partner). My family have helped me when times have been absolutely dire, but not to pay off any of the debt directly. It isn't the bank's fault for lending me that money, it's my fault for asking for it and spending it on useless crap and takeaways. One thing my parents did not do is ring up all and sundry complaining that I shouldn't have been lent the money blah blah blah blah blah.

The question here is not why the bank agreed the overdraft - they're within their rights to, if they think someone will pay it back then there must be some reasoning in there somewhere. It sounds like it's a student account. It's why the daughter applied for it and then spent it on crap. Hell, she may not even have spent it on crap - if she's a student, it may well have gone on university accommodation and such.

"Don't pry into the financial affairs of others" sounds like a good motto here.

AnonymousForObviousReason

Alpine_Star wrote: »

The teenager - clearly.

But given that banks are run by mature adults who have a regulatory duty to lend responsibly I believe the balance of responsibility lays with them.

I take it you're over 18? Would you be stupid enough to lend £2000 to a teenager on £300 a month?

I got a £1,250 OD facility when I just turned 18 (with no income). I ended up very close to maxing it out a number of times. It was cheap (free) credit because I was a student, I got a job, made a budgeted and paid it off.

Not all debt/credit is bad, often how people use/squander it is bad.

pqrdef

jimjames wrote: »

The problem we have is that everytime a case like this occurs there is a chorus of "stop the banks lending money to people irresponsibly"

It's not that long since most people didn't have current accounts at all. When I started working, I got my wages weekly in cash in a little brown envelope. That was considered appropriate for plebs, and most of them could cope, though some would be at the pawn shop come Monday morning.

But we're all middle-class now, so there's been a huge increase in lending to categories of people who previously would have been considered unsuitable borrowers. And they're still the same people, and they're no better at managing their money than they ever were, and they don't have the constraints that used to keep the middle classes on the straight and narrow.

Is this an improvement? It's not clear how. Nobody benefits from living beyond their means. Credit has its uses, but they're limited.

Easy credit encourages people to gamble on their future circumstances. e.g. not losing their jobs. Then when they're out of work they think they're in debt trouble through no fault of their own.

But the lenders are fully aware of the risks. They employ statisticians to collect and analyse piles of data so they know just what the odds are of a loan going bad. Having knowingly chosen to place a bet on the borrower's future circumstances, should they be totally absolved when the bet loses?

All concerned know that lending is a risky business, so a more rational responsible system would be based on an explicit apportionment of risks between borrowers and lenders, with borrowers not taking on risks they can't afford. There's something fundamentally wrong with the whole consumer credit industry being based on borrowers making commitments which both sides know they may not be in a position to keep.

CLAPTON

Alpine_Star wrote: »

It's entirely the point in my view. If the bank hadn't lent irresponsibly in the first place the irresponsible spending couldn't have occurred - and nothing will change my view on that I'm afraid.

If the same young lady had needed a cheap car to get to work (maybe working difficult hours / poor public transport etc) and she had used the money to purchase same and repaid the OD over the following months; then would the bank still have been lending irresponsibly?

iamana1ias

CLAPTON wrote: »

If the same young lady had needed a cheap car to get to work (maybe working difficult hours / poor public transport etc) and she had used the money to purchase same and repaid the OD over the following months; then would the bank still have been lending irresponsibly?

you don't seriously believe the OP would let his adult daughter drive, do you?!

She's nowhere near old enough to be capable of controlling a motor vehicle alone! No, he'll drive her everywhere (assuming he approves of the destination of course) having ensured she's blown her nose and has correctly tied shoe laces.

pqrdef

CLAPTON wrote: »

If the same young lady had needed a cheap car to get to work (maybe working difficult hours / poor public transport etc) and she had used the money to purchase same and repaid the OD over the following months; then would the bank still have been lending irresponsibly?

Different thing. With that style of lending, you have a fixed schedule of repayments, you check the borrower's ability to afford the payments, and you expect to see the balance reduce month by month.

The overdraft simply encourages people to spend more than they earn every month (with nothing to show for it) and build up an increasing debt with no plan at all for paying it off.

olly300

pqrdef wrote: »

Different thing. With that style of lending, you have a fixed schedule of repayments, you check the borrower's ability to afford the payments, and you expect to see the balance reduce month by month.

The overdraft simply encourages people to spend more than they earn every month (with nothing to show for it) and build up an increasing debt with no plan at all for paying it off.

It's not a different thing.

If you read around the many different threads on here you will find that some people buy large items including cars on their overdraft or credit card because it's cheaper than getting a loan out.

They then pay the overdraft or credit card back monthly. They can pay as much as they like and there is no-one holding a gun to their head saying they have to pay £x per month. * It's up to them to decide how many months it will take them to pay back the full amount unlike with a loan.

*In the case of the cc people they pay over the minimum payment.

molerat

I have credit available way in excess of what I could service from my regular income. Do I use this facility to its full, NO, I know I could not afford it. It is called common sense, something that seems to be lacking in many, both young and old alike. If the OP is going to be angry then be angry at their daughter and themselves, one for being stupid and the other for failing to teach her not to be stupid.