Personal Reserve Fee

Lucy1984

Yes that is the one.
No it is not interest-free, it is only interest-free for the first 4 years after graduation (or something like that), but I graduated longer ago than 4 years so now I get charged interest.
I know I need to stop spending

qpop

Lucy - I'm glad that's twigged, that's the first step in doing something about it. Now turn that positive momentum into some actions. The notebook / week wait method I've known people to have particular success with.

Jalexa, I am sorry to perpetuate our disagreement, to the detriment of the rest of this thread, but I'll expand.

I'm not sure how knowledgeable you are about how bank accounts work, but I'll give you an example from the bank I worked at previously:

If you were given an agreed overdraft, there would be, floating in the system, and visible to employees only, an "unauthorised overdraft limit". e.g. Mr Exx has authorised o/d of £1,000, but it is apparent to a staff member that the bank would continue paying non-guaranteed (i.e. direct debits and standing orders) up to the level of £1,500 (this is entirely dependent on the lending institutions credit scoring process). The use of this "unauthorised facility" was subject to charges of up to £25 per transaction with a monthly limit of something like £200.

Referring to, and expanding on your extract from the Barclays page re: reserve -

Introducing Personal Reserve

Personal Reserve is a service that gives you an extra agreed amount you can use if you occasionally need to go overdrawn or exceed your agreed overdraft limit. With it we aim to improve your day-to-day personal banking and help you avoid having transactions returned unpaid and the associated fees.
It's a new way to handle transactions on overdrawn current accounts and the charges associated with them. We want to make it easier for you to understand the fees you’ll pay if you go overdrawn without arrangement or exceed your overdraft, so you’ll always know where you are with your money.
A Reserve can:

• Provide you with an extra agreed amount to help with life’s little emergencies
• Help you avoid having payments returned unpaid
• Enable you to make more informed financial decisions
• Allow you to know exactly what you'll pay to use it

If you stay within your Reserve, all your payments will be met. If you go over your limit, you’ll be charged a fee for each returned or guaranteed transaction (up to a maximum of five fees a day).
Please remember that the Reserve is always repayable on demand. The maximum Reserve is £2,500, subject to status.
How Personal Reserve works (Link opens in a new window) and read the Personal Reserve FAQs

Reserve Usage Fees

You’ll incur a Reserve Usage Fee of £22 for the first five consecutive working days from when you start using your Reserve.
If you’re still using your Reserve after that time, you’ll pay another Reserve Usage Fee of £22 for each subsequent period of five consecutive working days.

Returned and Guaranteed Transaction Fees

If you go over your Reserve we’ll return your cheques, standing orders or Direct Debits unpaid and you’ll incur a Returned Transaction Fee of £8 for each transaction.
If you go over your Reserve and we have to make a payment because it’s guaranteed, you’ll incur a Guaranteed Transaction Fee of £8.
We will charge you a maximum of five fees (whether Returned or Guaranteed Transaction) per day.

Interest payments

To keep things simple, we do not charge interest on sums used from your Reserve, but if you have an agreed overdraft, you'll still pay interest at the applicable rate on any balance within the limit.
This is how a Personal Reserve would work if you had an agreed Reserve limit of £2,500:
Representative example:
0% interest per annum (variable)
Reserve limit – £2,500
One Reserve Usage Fee of £22 for each five-consecutive-working-day period from the day you start using your Reserve.
Personal Reserve is subject to status and application and is repayable on demand.

This "product" is in fact the formalisation of the above example. If you were to "opt out" of this product you'd just have your payments returned by the bank over your limit. The reserve (afaik) is never charged for in the same way a packaged bank account would be, and is offered on all credit scored Barclays accounts. So, in general terms, it is just an unauthorised overdraft respun as an "account benefit".

That is my last word on the subject, I hope more people are able to give Lucy some useful budgetry advice.

getmore4less

OK what you need to do is

change the account to a normal one with no fee saves £7pm


Ask for a slight increase in the OD and cancell the reseve.
OR
ask hubby to bail you out of the reserve.


Start a spending diary.

You have about £450 missing each month you must be able to save most of that

Dump the mobile and get a cheaper one you can't afford it, either cheap contract cash back or PAYG £10pm max.


How much would weekly travel cards be for one month?

How much would daily travel be for one month

That would stop a £200 payment and cut the reserve fees by £22 for every week you stay out

I did pay my overdraft off in full at the beginning of this year, but I have gradually crept back into in and now I am constantly at my limit

Go back over the last 6 months and try to remember where you spent the money.

What has the balance been each month since you were in the black.

Most of the overspend has probably happend in a couple of the 6-7 months.

getmore4less

Actualy just realized there is something very wrong here .

OD limit and reserve £1000 and £150

Paid in is £1700 £900 goes out to joint.

So thats £800 left, £650 to hit the reserve.

take out the £200 + £45+ £7

That means you are still nearly £400 from the reserve just after getting paid

Reserve fees are £22 per week so to get hit with 3-4 of those you must have spent that £400 very quickly.

noh

This "product" is in fact the formalisation of the above example. If you were to "opt out" of this product you'd just have your payments returned by the bank over your limit.

Not quite right.
If the customer opts out of the reserve they would be charged £8 as a returned item fee for those payments that are refused or £8 Guaranteed Transaction fee for paying guaranteed items such as debit card payments under the floor limit etc.

getmore4less

Another solution to the problem,

Next time you get paid take out only the cash that will keep you within the OD

No spending on the card just the cash.

noh

getmore4less wrote: »

Another solution to the problem,

Next time you get paid take out only the cash that will keep you within the OD

No spending on the card just the cash.

Yes that will work.
I would suggest she does a bit more than that as she is running a £1000 overdraft.
Draw out say £100 less than the amount that keeps you within the limit and spend only cash.
Also attempt to spend less than the amount you have drawn so that next month you can draw out less.

Lucy1984

Good idea, I get paid end of next week. I will definately do that.
It is going to be hard as I am going on holiday next month, but I will have to make it work.

getmore4less

YOu still need to go back through the accounts to understand where you went wrong so you can avoid it happening again.

If the OD was clear in Jan(begining of year)

You have 7month of pay(£800*7 )+ £1k to account for.

£6600.

Ok ((£200+£45+£7)*7 )£1764 identified that leaves over £4800.

mr_fishbulb

Lucy1984 wrote: »

Good idea, I get paid end of next week. I will definately do that.
It is going to be hard as I am going on holiday next month, but I will have to make it work.

This is probably going to sound rude, but it's not intended to be - I personally wouldn't be going on holiday if I was constantly living in my overdraft.

You're paying £88 per month in fees for using it, which is over £1000 per year. If you weren't going on holiday then you could hopefully pay off the overdraft (or at least get to the point where you don't keep dipping into the personal reserve).