RBS changing account and removing overdraft with 30 days notice-is this allowed??

mellymell_2

Hi there,

I have a graduate account with a £1000 overdraft limit (which I'm paying off) with RBS. This week I got a letter from them saying that because I graduated three years ago (I didn't but that's another whole argument with them!) They are changing my my account to a 'Select account'. Fine I thought, BUT with that, my overdraft reverts to £100 (in the small print) and this will be effective in 30 days. Now is it just me, or is this really bad?! I mean, who can get their hands on £900 to pay off their overdraft in 30 days?! I called my local branch who said they can't do anything, instead they have logged 'a concern' and someone will get back to me. What he did suggest was that I could take a loan out to pay my overdraft?! The point is, I don't want a loan, I am paying my overdraft off to get rid of my debt-I don't want to add to it! :mad::mad:

Now, I don't think this is right-they should at least transfer the full overdraft to my new account. Are they allowed to do this?

Any advice/thoughts will be appreciated.

happy_bunny_2

They can do this. Overdrafts are repayable on demand usually. Don't know if there were any terms and conditions with your student account that may be different, but unlikely.

If you get nowhere negotiating soon, open an account with a different bank to pay any income into, otherwise they will just keep anything/savings also to repay the money you owe on it.

Unless you repay, get a loan or successfully negotiate, they will probably trash your credit file if you don't pay it back within the 30 days.

Bored

Unfortunately overdrafts are repayable on demand (and this sort of situation is my worst nightmare!), however I would try to negotiate with them and ask them to reduce the overdraft limit by say £100 each month instead of recalling the entire balance.

mellymell_2

Thanks guys-it just seems really harsh. I have no problem with them charging interest on the new overdraft but I would have at least thought they would have carried over the same amount. I mean, I've got a really good credit history and never exceed my agreed limit.

I've made a complaint to the bank so we'll see what they say.

KingElvis

Melly, if you live in your overdraft you can't really have a good credit rating, well a good internal bank credit rating anyway.

The two are not compatible and the statement is non sequitor

mellymell_2

It is an arranged overdraft that's left over from my student days-I never exceed it, I pay all my bills on time etc. I'm just quoting what the bank told me when I applied for my mortgage........

My point was, I'm a 'good' customer-I earn them money and don't cause them grief

KingElvis

mellymell wrote: »

It is an arranged overdraft that's left over from my student days-I never exceed it, I pay all my bills on time etc. I'm just quoting what the bank told me when I applied for my mortgage........

My point was, I'm a 'good' customer-I earn them money and don't cause them grief

Yes, you earn them money but if you live in your overdraft, you are judged as not living within your means and the banks treat you as such.

Overdrafts are really meant for emergencies and not for day to day spending.

My advice is to get shot of your overdraft and get out of the habit of using it.

mellymell_2

KingElvis wrote: »

My advice is to get shot of your overdraft and get out of the habit of using it.

Which is exactly what I'm doing-but it's not helpful if they force me into a situation to borrow to pay off an overdraft. As I said, it's a artefact of 8 years in university it's on its way out....

stclair

mellymell wrote: »

Hi there,

I have a graduate account with a £1000 overdraft limit (which I'm paying off) with RBS. This week I got a letter from them saying that because I graduated three years ago (I didn't but that's another whole argument with them!) They are changing my my account to a 'Select account'. Fine I thought, BUT with that, my overdraft reverts to £100 (in the small print) and this will be effective in 30 days. Now is it just me, or is this really bad?! I mean, who can get their hands on £900 to pay off their overdraft in 30 days?! I called my local branch who said they can't do anything, instead they have logged 'a concern' and someone will get back to me. What he did suggest was that I could take a loan out to pay my overdraft?! The point is, I don't want a loan, I am paying my overdraft off to get rid of my debt-I don't want to add to it! :mad::mad:

Now, I don't think this is right-they should at least transfer the full overdraft to my new account. Are they allowed to do this?

Any advice/thoughts will be appreciated.

They are allowed im sorry to say this a section taken from the T&Cs:

4.5 If you graduate:
(a) before 1 January 2013, we may convert your Graduate Royalties Account to a Select Account, subject to our
assessment of your financial position, in July three years after you graduate; or
(b) from 1 January 2013 onwards, we may convert your Graduate Royalties Account to a Select Account, subject to our
assessment of your financial position, in July two years after you graduate.

4.6 If your Graduate Royalties Account is closed, the benefits will no longer be available to you.

izools

mellymell wrote: »

Which is exactly what I'm doing-but it's not helpful if they force me into a situation to borrow to pay off an overdraft. As I said, it's a artefact of 8 years in university it's on its way out....

If your external credit rating is as good as you suppose it to be, you would be best advised to take out a "SBT - Super Balance Transfer" credit card - an MBNA card.

This way you can transfer money into your bank account at 0% for 18 months; giving you the freedom to pay off the balance at your leisure without incurring interest.

jalexa

mellymell wrote: »

Which is exactly what I'm doing-but it's not helpful if they force me into a situation to borrow to pay off an overdraft.

Why not? An overdraft is repayable on demand, as unfortunately you have found out. A loan guarantees fixed payments for a fixed period. I'm guessing at a lower interest rate? Your overall indebtedness is unaffected.

You posted you have a £1000 overdraft limit and it's sitting at £900 (3 years after "graduating"). Did I get that right?