Overdraft problem

jorainbow1

Hi all - I have an overdraft with HSBC on an account I no longer use. After a relationship break up I got this one to pay off my ex another. It is for 1k. I have been paying £20 per month but charges mean it is really £4. This is all I can afford. I received a letter yesterday saying they wanted me to pay £440 into my account within the next month. I called this morning and was told no - they want that to go through my account each month? I am calling back later to do an I&E form but this is all I can afford. I commented that had the interest charges not been so high this amount would have been paid off months ago and is there nothing they can do about this. No. Essentially I was told if I cant pay more then its collection time but this is all I can afford anyway?? What is my best coure of action pls? Help

JamesWMH

Do you mean that £20 is being paid into the account every month and nothing else? If so they might just want you to pay your wages into it every month, and you could still be taking £20 from the overdraft after spending.

jorainbow1

Thanks - I have another current account which I use for wages in bills out etc that has run for years so I don't really want to mess with this?

JamesWMH

Most banks like your current account with them to be your main one, so if you possibly can I'd try to switch the two over, with them knowing your paying a considerable amount in each month they should let you keep you overdraft.

If I was you I'd ring them and find out if they'd be OK with that.

happy_bunny_2

On the other hand, if you pay your wages in, they may just cancel your overdraft at the start of a month, especially as you told them you don't have much money to pay it back.

Best plan is to try and agree to get it reduced by a set amount each month. I did this with RBS for an account I no longer use. No chances of my wages going anywhere near it!

Although, it must be a large OD for them to want £440 per month to be paid in and £16 PM interest, maybe 1K?

They are likely to want it to be reduced by more than £4 PM.

meer53

It will have triggered because you're not going into credit at any time. Once you have done the i & e form with them they'll probably agree a repayment plan for you according to what you can afford but will probably want to remove the overdraft and maybe close the account. Thats probably the best option for you.

jorainbow1

Morning all - yes its £1k and has not been an active account for over 3 years in terms of anything other than this monthly credit going in. I have checked back and was initially paying £30 per month and reduced this 6 months ago due to tight finances to the current £20. I will be giving them a call today re the I&E which I did last night.I think closing the account would be a better option and then agreeing a repayment plan. I did intially go in branch and request to transfer this to a loan and close the account but they said no so I have basically been doing what I thought was best.

MrsTinks

Unfortunately as you have found out banks can review overdrafts and remove them at very little notice. I think all they have to give you is 1 month and they can ask for the money to be repaid and they'll remove the future facility...
You need to get your SOA together so we can see if there is any leeway to increase your payments to them and then tell them that you will be able to afford to repay £x. Unfortunately this will probably result in a default on your credit file I'm afraid.

jorainbow1

SOA????? Sorry not used to the terminology. Whilst I understand that I owe the money I have in effect paid from an initial balance of £1200, just shy of £1000 and still owe the same. And been told all the way down the line this was my only option. No wonder banks have a bad reputation.

Also dont understand why it would be a default on my credit when I have been paying exactly what they have asked for and agreed??

jorainbow1

Thanks for advice - went into branch on Friday with a PTP of £500 which my mother has kindly leant me - they are reducing the overdraft limit thereby reducing the interest and I have the department details the branch advised me to complain to about their management of the account. They agreed this should have not been allowed to go on for so long as they ok'd the original payment structure and I have all the letters to prove they were happy with the overdraft facility and the repayment plan. The excuse that the debt management section used was that the limit was flagged now as it was over a certain level - it had been higher than that for 3 years! I will continue to make payments at the current level, adding to if I can afford to. Common sense prevails without the need for bullying tactics of credit ratings and the rest.