WARNING!! Barclays - Online Overdraft Increase

garynuman

Also posted on Wanabees forum. Sorry for cross-posting but thought this was important..

Hi all

This is a heads-up for anyone looking to increase their overdraft at Barclays. Apologies if this info is already known but I was very nearly caught-out by this shameless practice.

I currently have a £1000 overdraft on my online current account. I "live" within this overdraft which is free to use provided I don't go over it when the normal charges apply. When I logged on recently, there was a very prominent promotional banner advertising an "immediate agreement" to an increase to my overdraft.

Trying to keep a grip of my debts, I thought that it may be a good idea to increase it by £250 to avoid any charges, so I applied. The maximum overdraft offered was £1500+. I received a letter a few days later confirming the change only to discover this in the terms and conditions:

"If you borrow the full amount of your overdraft and remain overdrawn by that amount for 3 months, the total charge for credit would be £55.53 (assuning interest rates and charges are not varied during the 3 months)."

My interpretation of this is that although my overdraft has been agreed and increased to £1250 (from £1000) - I will now be CHARGED if I continue to use the overdraft facility as I have become accustomed to - it is no longer a facility of my current account.

I called Barclays and their customer services person knew NOTHING about this practice but agreed that the increased overdraft IS NOW CHARGEABLE (nearly £20 per month!) Fortunately, I am still within the 14 days cooling-off period and have requested it is cancelled and original £1000 (free) overdraft reestablished.

Perversely, if you try to cancel after 14 days, you will need to pay your entire overdraft off!

I am trying to get a grip of my debts and thought the increase would mean fewer £12 overdraft charges. Another CON by the banks!

Gaz

jonnyb

you have an interest free overdraft for up to £1000 ? why would a bank give money away like that.

very lucky if so.

JuicyJesus

The total charge for credit includes interest. So basically, what they are saying is if you drew up to the top of your overdraft and then left it that way for three months without paying any money in, you would be charged that amount of interest. The total charge for credit is not an actual charge, it is illustrative. It has been common practise on credit card summary boxes and marketing for a long while.

They have to put that there now so that people have a rough idea of how much interest they will get charged for using a given borrowing facility.

I'd be interested (pun not intended) to know how you weren't getting interest charges on a £1000 overdraft previously. £100, perhaps. £1000? No.

money_honey

I believe that Barclays offer an interest free overdraft of up to £1000 on their premier current accounts, I'm guessing that's what the OP has. According to their site they charge 14.9% interest if you have an overdraft greater than £1000 (http://www.barclays.co.uk/CurrentAccounts/Youroverdraft/P1242557964230). Be glad you don't have their standard current account, I get charged 19.5% interest on my overdraft if I ever go in to it.

garynuman

Hmm.. Now I'm confused (easily done!)

There's nothing on my statement that would imply it is a "premiere current account" - just a "Current Account". It is an Internet-based account though.

As an example, I have checked a recent statement and there is a balance of -£791.40. I was clearly charged just £3.53 "Overdraft Interest". I know there's no such thing as a "free" overdraft - but this pretty darn close!


If I had not cancelled this, it would cost me an extra £18 per month after 3 months.

Gaz

Gromitt

The basic account isn't called a "Current Account", it's called a "Barclays Bank Account". Ambiguous and weird, but that's what I was told by the bank and what it says on my statements.

The next up is "Current Account Plus", for £6.50/month and give you a £300 fee free overdraft.

Maybe you have an account that is no longer offered?

CLAPTON

garynuman wrote: »

Hmm.. Now I'm confused (easily done!)

There's nothing on my statement that would imply it is a "premiere current account" - just a "Current Account". It is an Internet-based account though.

As an example, I have checked a recent statement and there is a balance of -£791.40. I was clearly charged just £3.53 "Overdraft Interest". I know there's no such thing as a "free" overdraft - but this pretty darn close!


If I had not cancelled this, it would cost me an extra £18 per month after 3 months.

Gaz

interest is charged on the DAILY balance

so if your DAILY balance was -791 for every day of the 30 days in the month and the APR was 14.9% then you would be charged £9.6 per month

however if you daily balnce was sometimes positive (after your salary has been paid in) (no charge those days) and your OD was -791 for only 10 days then your would be charged about £ 3.5 per month

garynuman

@Clapton. Yes I think you are correct. My salary goes into the account and for a week-or-so, I'm in credit. Then rent and other outgoings are paid so this is probably right.

Thanks to all who have posted.