Bank cancels my overdraft facility

Watson

A few days ago I had a standard letter from the Bank of Scotland about my overdraft (current agreed limit: £500). The letter said, in part:

I am writing to tell you that the review date for your existing overdraft limit is on 27th January. From this date your overdraft limit will be £500 based on our knowledge of your account. If you want to change your overdraft because your circumstances have changed, we will be happy to review it at any time.

I rang up the telephone helpline and asked about a short-term increase: say to £1000 for three months, then reverting to £500. I was amazed to be told that the facility was actually going to be withdrawn completely "because of the way the account is being conducted".

When I asked for clarification they mentioned a couple of direct debits which hadn't been paid because they would have exceeded the overdraft limit. This arose because of a temporary (and continuing) lack of income - which of course was why I needed the increase anyway.

I've written to the apparent sender of the letter ("Managing Director, Banking and Savings" at the Bank's Head Office) explaining the situation. What does anyone think of my chances of getting at least my usual £500 facility back?

Watson

tom188

Unfortunately unless you are going to get another job soon you have no way of paying it back therefore the bank has cancelled the overdraft to protect its assets. Have they asked for repayment as well?

Overdrafts are aimed at short term borrowing requirements for people who fund their account regularly, and are repayable on demand. I guess they have decided you are a risky customer at the moment and have exercised their right. J

Worth trying though.

Watson

Thanks for the reply. I'm self-employed and my income has always tended to be erratic - something the bank knows perfectly well and has always been happy to accommodate up to now. They haven't (yet?) asked for repayment of the overdraft, so presumably they will clobber me with all sorts of charges and interest rates from the moment they withdraw the facility.

It proves the truth of the age-old saying that a bank is an institution which will happily give you an umbrella when it's sunny but will immediately want it back as soon as it starts to rain.

Watson

regularsaver1

At the moment you are relying on the overdraft.
Although it may not be advisable to move to another bank to go into an overdraft again - it may be an idea for the moment if you don't mind having a credit score done at another bank ? Be careful though as overdrafts are not loans

Is there anything you can cut back on - may be worth you heading for the Debt-free wannabe board and typing out a SOA where people are really friendly and would help give you tips where they can

I know that HBOS (Halifax Bank of Scotland) review their accounts based on regular credits ect - so are you paying the cash into your account due to being self-employed? this may make a difference

Watson

Until now, I've had pretty good service from the bank; I don't really want to up and move if I can help it. Yes, at the moment I need the overdraft, but for long stretches of most years I don't: this simply happens to be a bit of a fallow period.

I hope that the central office will consider more than the short-term picture and reinstate things; I'd have thought that the sum involved was fairly small beer to them, really.

I take the points about cutting back and so on.

Watson