Co-Op Overdraft Fees

greengal

Hi everyone

This is my first post on the forums, although I have been an avid reader for a few years!

Anyway I'm just trying to work out something to do with my current account and potential overdraft fees and I wondered if any of you could help.

I have had a student account with the Co-Op for 4 years. I graduated in June 2010, and the co-op allowed me to keep the full £2000 overdraft for another year.

That time is now up. I have tried really hard to pay it back, but for one reason or another, I've only managed to pay £1000 back.

The co-op sent me a letter about a month ago saying that my account would be converting to a standard current account on 31st July. It also said that they would let me keep my £2000 overdraft as a ''formal'' overdraft.

It just wasn't very clear about fees etc, and I can't seem to find anything about formal overdraft charges (as opposed to informal overdraft charges, which I understand).

All I can see on the charges leaflet is something which says Debit interest rate 1.24% EAR 15.9% or something.

Do I get charged for individual items/payments/withdrawals of cash or what?

For example, at the end of this month, I'm expecting my wage to go in and ''clear'' the overdraft back up to 0, but then I need to pay credit card bill etc so I would go back overdrawn in a couple of days. Obviously I need cash to live off to, but I just don't understand what kind of fees I'm going to be charged for this.

I would expect to be able to fully pay back the overdraft in a couple of months, and I do have savings. If I was going to end up paying a lot in fees, I'd probably rather live off my savings for a month or so to aviod the charges and then put the cash straight back.

Anyone have any advice?

Thanks

Helen

Lokolo

You get charged on the amount you are overdrawn by.

So if you are £1000 overdrawn at 15.9% annual interest you will get charged £159 a year, which is £13.25 interest a month (which is when it will be applied to your account).

premierfella

....plus the £20 per year fee for the formal overdraft.

greengal

Thanks Lokolo! So what if my balance goes up and down during the month? Say it starts off at 0 (just after I've been paid, on 1st of the month), and then during the month it gradually goes down to say -£1000 with general spending/paying bills. Do they calculate the charge on how overdrawn you are at the end of the month? Or do they take an average over the whole month or something? Presumably in a couple of months once I go back into credit, they will stop charging me the fees?

CLAPTON

greengal wrote: »

Thanks Lokolo! So what if my balance goes up and down during the month? Say it starts off at 0 (just after I've been paid, on 1st of the month), and then during the month it gradually goes down to say -£1000 with general spending/paying bills. Do they calculate the charge on how overdrawn you are at the end of the month? Or do they take an average over the whole month or something? Presumably in a couple of months once I go back into credit, they will stop charging me the fees?

it's calculated on the daily balance; so if there is no balance (or positive) on a particular day then no interest is charged otherwise it would be the
negative balance x 15.9% /365

greengal

Also does stuff like this go on my credit record? I am looking to get a mortgage probably in a year or two's time when I become qualified in my job.

ses6jwg

Yes it does affect your credit report.

How much will vary from lender to lender, but if you have an overdraft you are managing, that is not so bad. If you are living in that overdraft, this might make you look reliant in credit.

If you are able to fund your account with £1000 a month, I would consider switching to another provider, Santander for example are offering 0% on an OD for 12 months.

Otherwise, you could do all your spending on the longest 0% purchase credit card and this will reduce your OD.

Before you can focus on reducing your debt, you need to focus on shifting it to the cheapest form of debt availiable.

If you have savings, it will be worth using those to pay off the OD.

jalexa

greengal wrote: »

Also does stuff like this go on my credit record

The "limit" is recorded on your credit record but AFAIAA, not how much you are into it. If you exceeded your limit for more than a month then an adverse payment marker would be created.

If you avoid adverse payment markers you have little to worry about, though the potential cost of servicing the full overdraft (the interest) will probably be considered as an "outgoing" in any mortgage affordability calculation.

Neverending_Story

Keep an eye on the fees, I am having the exact same problem and they keep taking an extra £20 a month 'service charge' from my account and I have to keep asking for it back. Once it's paid off they are going and I am NEVER banking with them again.

Good luck with them x

greengal

Just wanted to let everyone know-two days ago I logged onto my internet banking to see that Co-Op had charged me a £15 Overdraft ''Arrangement Fee''. I promptly rang customer services, and explained that I had not been explicitly told that I would be charged a fee for having the overdraft, even if I didn't use it, and that I had already phoned up when I received the original letter from them asking whether I would be charged anything for having the overdraft even if I didn't use it, and was reassured I wouldnt be.

I explained this all to the woman on the phone, and said that it was unfair as they had not explicitly told me about the fee (in fact, they denied that I would have to pay one), and after a couple of minutes on hold, she agreed to refund the amount to me.

I'll probably be cancelling the overdraft in a couple of months time.

I have had problems like this with Co-Op before, such as when they took my overdraft away from me in my second year of university without warning me, but I'll continue to bank with them because I find that overall they provide excellent customer service and I totally agree with their ethical policy.

I guess no bank is perfect, but you just have to keep an eye on them!