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Unfair Halifax Student Overdraft Rules!

I have had a Halifax student current account since I started university 5 years ago. When I started, they offered me, and lots of other students, an interest-free overdraft facility. Like most students I didn't know how to look after my money and increased my overdraft limit whenever increases were made available. Free money - wahey!

I have recently decided to start the process of paying off the overdraft, in the hope of eventually closing my Halifax account and never going back. Today reinforced why I want to!

I called up in the hope of reducing my overdraft limit by £400, and was told that the "system says you can't reduce the limit unless you do so by nearly £1000." I do not understand the point of this rule - "students, get yourself into thousands and thousands of pounds of debt, but if you try to pay back what you owe in incremental chunks you can afford - no chance!"

I just think this is a terrible example of how banks like to keep people in debt so they are always at risk. I decided to call back and make a complaint, and very quickly someone, somewhere, in the Halifax group was able to circumvent the "system" and my overdraft was reduced by the amount I had originally requested. But only when I took further action and decided to complain. Terrible service from the bank.

I think the idea of refusing to allow people to control their debt in a way they can afford is awful - I am still a student, saving the £400 for today's payment was tricky enough, there's no way I could just pay off a £1000 lump sum.

I will continue paying my overdraft off in little blocks I can afford and get away from Halifax as quickly as possible!
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Comments

  • rdchick
    rdchick Posts: 1,815 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Well done for paying that bit off - I too had a Halifax student account - however I got stung into taking a loan out to pay it off - so now I have a £3000 overdraft maxed out and £3500 so just be glad they didn't con you into taking out a loan because I was still in the student mindset of - free money!

    Perhaps open another account with no overdraft facility and leave the halifax one to gradually come down by paying a little bit into it every month?
    Life is too short not to love what you do.
  • Thanks!

    Yeah that's a good idea, I'm going to be starting work in a few weeks so hopefully it will get easier to save and pay it off. I was just so angry at their attitude. The never NEVER discourage people from adding more to their overdraft! It's so irresponsible of them to have encouraged you to take a loan when you already owed them money from your overdraft. I know no banks are benevolent philanthropists, but they seem really really hard opportunistic and manipulative.

    And although I'm glad they did what I wanted eventually, it was frustrating that it really only took a few minutes, and obviously could be done, when the message before was "computer says no, not possible, can't do it."
  • Bored
    Bored Posts: 390 Forumite
    Part of the Furniture 100 Posts Name Dropper Debt-free and Proud!
    It's not just Halifax you know, all banks encourage people to take out more and more credit because when you do the banks make money! Don't get angry, just get smart and don't let yourself be manipulated by them.
    2023 Mortgage-Free Wannabe #19: £11,675.68/£13,000
    Mortgage Overpayment Total: £22,397.1
  • I'm not so naive that I don't understand that, it was just frustrating that they were refusing to allow me to pay back what I could afford.
  • Bored
    Bored Posts: 390 Forumite
    Part of the Furniture 100 Posts Name Dropper Debt-free and Proud!
    I know, I just thought I would point out that all banks are the same, because you mentioned 'getting away from Halifax as quickly as possible'. I didn't mean to insult you.

    Good luck with it anyway, I also have a maxed out student overdraft to clear so I feel your pain! :)
    2023 Mortgage-Free Wannabe #19: £11,675.68/£13,000
    Mortgage Overpayment Total: £22,397.1
  • pjcox2005
    pjcox2005 Posts: 1,018 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Just to be clear, most overdrafts by their very nature will allow you to withdraw or pay in any amount of sums whether below £1,000 or not.

    Are you sure Halifax weren't simply saying that they prefered not to reduce the maximum overdraft available to you unless it was up to £1,000, on the basis that it would be quite time consuming to reduce overdrafts (and potentially subsequently increase the limits if needed) by £50 here or there each time. i.e. you could still pay it off completely but just have the facility unused in the background.
  • lazer
    lazer Posts: 3,402 Forumite
    I'm not so naive that I don't understand that, it was just frustrating that they were refusing to allow me to pay back what I could afford.

    They were not refusing to allow you to pay back what you can afford, they are refusing to allow you to change the limit, that is not the same thing.
    You can just not use the £400 of your available overdraft.

    An overdraft is not a loan, it is facility and is there for you to use if you choose to, but you not have too.
    Personally I think you should keep your overdraft limit at more than you will ever need as it therefore gives you a safety net to avoid unauthorised overdraft charges.

    Good luck paying it off.
    Beware that if you do get a new current account and make small payments into the halifax to bring down the used overdraft, then Halifax may notice you not using the current account as your main account and may demand immeadiate payment of the remaining overdraft.
    Weight loss challenge, lose 15lb in 6 weeks before Christmas.
  • rdchick
    rdchick Posts: 1,815 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    What I plan to do is get mine down to nothing then lower it down to max £500 I just can't (well couldn't ;)) trust myself to not give in to temptation - best plan is to forget about it and then it'll be gone if you keep paying little bits into it :)
    Life is too short not to love what you do.
  • Yes I understand what you are all saying and I appreciate the advice.

    I am aware that an overdraft is not a loan and I can just not use it. My aim in making today's payment was to reduce my limit to encourage myself to keep increasing the funds in my account so I can avoid the overdraft charges when they start next year.

    I know I could just have paid more and more in while keeping the limit as it was, but I felt uncomfortable with the amount, and as I was in a position to, I wanted to remove the temptation to dip further into the facility.

    My grievance was really just that they said they couldn't do what I asked, when they clearly could, because they did after I complained.
  • rdchick
    rdchick Posts: 1,815 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Thinking about it I had similar troubles upping my balance whilst being a student - I went into my sleepy hometown branch to up the amount, told it wasn't possible, then the same day I went to my university city branch and walah! 'it'll be in your account within the next 24 hour' (often before I walked out the door) So just goes to show that half the time they haven't got a clue!!

    Santander were very similar in screwing up with what you can and can't do - when I tried to open a grad account in March - told yep, all going through lovely jubly... nothing happened for ages - I chased them and was told nope not happening now... (thankfully gave up with Santander and didn't get another overdraft or account!)
    Life is too short not to love what you do.
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