Livid. The bank and the teenager's overdraft

CLAPTON

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.

just to clarify then; if the young lady got a loan, wasted the money on junk and then stopped making the monthly payments then that would have been responsible lending and no-one would lblame the bank for giving that loan to an 18 year old with a very low income?

pqrdef

CLAPTON wrote: »

just to clarify then; if the young lady got a loan, wasted the money on junk and then stopped making the monthly payments then that would have been responsible lending?

She wouldn't get the loan, because the repayments would obviously be unaffordable.

Of course, if I'm Lord Moneybags, I expect my sprogs to be given overdrafts on the strength of my own credit, I don't expect them to live within their means, and I don't think twice about writing the necessary cheque every so often.

ellanutella

olly300 wrote: »

Why?

The OP for some reason thinks they can march into the bank and tell the bank what to do.

People are just pointing out that legally it's none of her parent's business - the bank cannot discuss the matter with them. This also means that the parent cannot be made to pay it back for her under any circumstances.

There are lots of students who get into more debt then what their parents think is acceptable and it's been that way for a good few years. The students learn the hard way when their parents make it clear they are not going to bail them out that they have to sort the situation out themselves.

And yes the OP can tell their daughter to have a budget etc but if the daughter refuses not to listen there is nothing the parent can do. In fact the only thing the OP can ensure they do is not to bail them out in any shape or form. Otherwise the OP is setting themselves up for a lifetime of their adult child scourging of them.

I've not seen it anywhere that the OPs daughter expects a bail out? Or indeed that the OP is going to give one. I read it that the OP is outraged that the banks will seemingly just give £2K to 18 year olds which they feel is irresponsible seeing as most young people have no idea how to handle having all this money. The banks don't seem to want to encourage sensible banking, which in these times seems very silly.

ellanutella

Funkyfreddy wrote: »

Aside from some guidance at home what exactly have the last umpteen years of education been for ?

FF

So she can pay £9000 to get a useless qualification presumably.

olly300

ellanutella wrote: »

I've not seen it anywhere that the OPs daughter expects a bail out? Or indeed that the OP is going to give one. I read it that the OP is outraged that the banks will seemingly just give £2K to 18 year olds which they feel is irresponsible seeing as most young people have no idea how to handle having all this money. The banks don't seem to want to encourage sensible banking, which in these times seems very silly.

Are you aware 18 year old first year university students can get overdrafts of 2K or more?

AnonymousForObviousReason

ellanutella wrote: »

I've not seen it anywhere that the OPs daughter expects a bail out? Or indeed that the OP is going to give one. I read it that the OP is outraged that the banks will seemingly just give £2K to 18 year olds which they feel is irresponsible seeing as most young people have no idea how to handle having all this money. The banks don't seem to want to encourage sensible banking, which in these times seems very silly.

I've not seen it anywhere that the OPs daughter was given £2K by the bank. There was an Overdraft facility provided (which is a fairly standard benefit with most accounts) which was used by the person in control of the account.

Others can manage their money, why should they be penalised for the stupidity of others? The OP shouldn't have allowed the child (in attitude if not age) to have any bank account if they couldn't be trusted.

Responsibility is the key here. It may be a harsh lesson but if taught properly they won't be making the same mistake again.

ellanutella wrote: »

So she can pay £9000 to get a useless qualification presumably.

It has been shown that people with degrees earn considerably more than those that don't (about £2.5k a year). The qualification content may be useless but it shows the person can learn and think, so opens up the job market. When recruiting for an administration/data entry position, I threw out all CVs that didn't have at least a 2:1, unless they were stunning in some other way (i.e. exactly the right knowledge with a few years of experience).

thriftychap_2

So im guessing she is a student, if so an £1800 overdraft is not too bad considering the situation some of my friends at uni found themselves in. However, over what time perios was this debt accumalated? if it was 2 years - big deal! if it was 2 month......BIG ISSUE!

I left uni and my overdraft was £1955 of £2000, i was back in credit within months.

Good luck to her paying it back and learning a lesson if there is one to be learnt.

I also think some posters are being a little unfair to the OP, who as it appears to me is just concerned for his daughter.

crayola

Tbh, I was also given a £2000 overdraft at 18 and basically lived in it for the next 7 or 8 years before my job, living costs and lifestyle finally balanced out enough to get back in the black. I wasn't sensible about it either and regret some things about it now, but mostly I don't because I didn't have any other option at the time and it was better than credit card debt.

Do you not expect her to ever earn enough to pay if off?

McCreary

This is the reason why financial management and general understanding of how the economy works should be taught in secondary schools. I'm saying this as a teacher myself. We live in an 'instant' culture where people seem to think they are entitled to the latest gadgets or luxury lifestyle even in they cannot afford it.

A couple of decades ago if you couldn't afford something you either worked more hours and saved up or just did without. Now the amount of young people who run up overdrafts and credit cards to get things like iPhones is becoming epidemic. Again, I say this as a young person (early twenties) who likes gadgets but pays for them with my wages.

Banks are greedy because they want to make money off people like the OP's daughter. In a perfect world they would offer advice on what was best for your daughter but to put it bluntly they want her to be in debt so they can make money off the interest she will incur. Schools don't educate children about this and young people live in a culture of entitlement - this is the reason your daughter is in debt. Personally, if I was her parent I would use this as a 'lesson learned' and support her through it - she's probably scared and embarrassed. Make it clear that you will help her on this occasion only and tell her to learn from it. I do not mean pay off the debt, but rather support her in lowering her rent slightly or something along those lines. If she does it again then it is, indeed, her problem.

pupsicola

It is appalling that the bank allowed such a young person with so little income to have that amount on an overdraft. Of course at 18 she is going to be like a kid in a sweet shop and go on a spending spree.

Personally I would feel like going to speak with the bank manager and pointing out the idiocy of their actions. I can empathise with you thinking that just because you have an account with this bank too you will not be clearing your daughters debt. If she isn't normally so reckless hopefully she will see the error of her ways and get this debt cleared quickly. It could help teach her about the value of money and that there is no such thing as a free lunch.

My cousin got into a mess with her finances whilst living wth my parents as a teenager. An overdraft problem was the tip of the iceburg and my parents house ended up getting blacklisted.