Overdraft Usage Fee!!!

MrEngland

Hi all, first post. Im unemployed, actually Im incapacitated because of a trapped nerve in my back, I'm also trying to live day to day with depression. Im not talking about the depression everyone gets over money or work. This depression makes me want to destroy myself and has had a good try at succeeding over the years. I have a £1000 overdraft, don't ask me how - I guess its the "always not having enough" syndrome we all suffer with. I have two questions regarding this overdraft if someone can help. Firstly I pay 19% A.P.R. on this overdraft, lloyds, and one day a manager in the branch came over to me and said,"We are introducing a new charge on overdrafts, you will notice it on your bill as "Overdraft Usage Fee" and they now charge me £5 Not £5.01 or £4.87, not £5 five pounds each month for using my overdraft. I shouted at him in the Bank, (as I always make sure I do so everyone can hear what he said) I ALREADY PAY YOU A FEE ITS CALLED INTEREST he said there was nothing he can do. Now £5 a month represents 5% APR effectively on my overdraft, IS THIS LEGAL! (bit of a stupid question I know, Banks ARE GODS!) the other question is how can I make this months interest drop, is there a better way of borrowing £1000 thanks in advance Phil

Apples2

Move to a bank who charge less.

Not entirely sure how your ranting & shouting in the bank is going to help your depression.

Dabooka

You need to work on reducing the £1000 overdraft somehow.

Shouting about it isn't going to get you anywhere and certainly won't endear you to the staff.

paddyrg

£5 is not 5% of £1000. It is 0.5%. But if you feel it is too high, why not move to a different bank if they'll have you (but if you constantly live putely within your overdraft, they won't be queuing up to take you).

This, by the way, is the opposite side of the PPI reclaiming - a valuable revenue stream needs to be replaced from somewhere, so it is fees on current accounts.

magpiecottage

paddyrg wrote: »

£5 is not 5% of £1000. It is 0.5%.

Not if he pays it every month - at a constant £1000 outstanding it would be 6% per annum - plus the actual interest rate.

I have to say, though, a manager wandering over to a borrower in a branch and telling him they were introducing a charge is unlikely to be considered proper notice of a change.

opinions4u

magpiecottage wrote: »

I have to say, though, a manager wandering over to a borrower in a branch and telling him they were introducing a charge is unlikely to be considered proper notice of a change.

Well it's certainly an unusual opening gambit in a sales focused branch environment!

I think the two mailings many weeks prior to the introduction of the £5 charge covered off the regulatory requirements.

Rupert_Bear

Im with Lloyds and if I ever need to go overdrawn I always use my Cahoot current account. I have an overdraft facility with an interest rate of only 10.4% and no monthly fee.

magpiecottage

opinions4u wrote: »

I think the two mailings many weeks prior to the introduction of the £5 charge covered of the regulatory requirements.

But that relies on the recipient actually reading it.

Maybe the bank has suffered from FOS arguing that putting it in writing does not necessarily mean they realised it "particularly if it was not pointed out".

(I have seen that happen).

Apples2

magpiecottage wrote: »

But that relies on the recipient actually reading it.

Maybe the bank has suffered from FOS arguing that putting it in writing does not necessarily mean they realised it "particularly if it was not pointed out".

(I have seen that happen).

That would suggest if the banks wish to change any terms/fees/rates etc they would have get the customer to return an acceptance chit for each letter.

Either that or call all the customers in for a face to face chat, or have home visits .

Culex

magpiecottage wrote: »

I have to say, though, a manager wandering over to a borrower in a branch and telling him they were introducing a charge is unlikely to be considered proper notice of a change.

As the conversation could be overheard by other customers (and subsequently by passers-by!) it was also an egregious breach of confidentiality.

paddyrg

magpiecottage wrote: »

Not if he pays it every month - at a constant £1000 outstanding it would be 6% per annum - plus the actual interest rate.

Agreed. Actually more like 6.2% if it was the only rate, but with the interest rate compunding that too it would be higher. But the OP said it was 5%, so I wanted to suggest there may be a bit of confusion in his figures. Even if it was 'simple interest', it would be 6% as you say!