Any advice on Pros & Cons of O/Draft v Loans Please

silv.surfer

I am trying help a Neighbour Friend. I am lucky that I have savings and dont want CCards, only use Debit card plus another Debit C Accnt. that gets fed when I buy online or TV and there is a Lock on that so if details got hacked it would Reject. So I am not Streetwise on the Pros & Cons between loan and overdraft. I believe my Friend is being had over by his Bank RBS I think.

The Neighbour I am trying to help is like babe in arms re loans etc. owing to Teenage glue sniffing ( he is 49 now ) So I offered to help him and have to explain things several times before he gets it.

He has had 2 small loans from Brit.Gas - one on his Elec Meter and other pay back £8 fortnightly 3 payments to finish. Crisis Loan paid back recently and £400 Provident - Prov. and Brit.Gas were taken out when he was working but was made Redundant 4 years ago from a lowpaid Manual W/House job.

He is now on JSA with C/Tax and H/Benefit so I set out Date/ payment plan for Prov. upping payments from £8 to £15 after Brit.G fiinished.

All was in hand on those then where he is on a Job Centre Work search Prog. phoned and told him not to go in on that Fri. when went in Mon. she said why not in Fri he said you told me not to - she said "I only meant morning not out all Fri. I'm going to take JSA Sanction for 2 weeks " so he got JSA etc. of 1 week owed as Giro instead of Bank so Bank :mad:

Thats the Scene so far, he was going to get Crisis Loan but I said no I would help out and could pay back bits after couple of JSA's

Now back to the Bank he originally had the usual £100 'Buffer' the Bank then offered £500 O/Draft which he took and unwisely used so when they offered another £500 added he accepted - he thought one would settle the other - Told you he didnt understand things - has now used this Total £1000 O/Draft and they are charging £14.61 month coded I/G plus £8 coded BID which is probably Insur.

What I would like to know is would it be less interest to convert O/D to £1000 loan to pay back than he is paying for £1000 O/D at present -because the charges keep putting him over limit and he is keeping inside see costs in last 2 lines of prev. para.

I am 72 years young Pensioner and have lent £50 in bits as necessary which he wanted to pay back as soon as JSA back but I said no get couple of JSA to get Elec. etc. - I wouldn't help just anyone but he is Neighbour for 10 years and usually very Private with his Disability, but trusts me now to ask for advice with Finances.

Any help on Pros and Cons of O/D v Loan in his situation gratefully received - I want to be sure of my facts before I go to Tackle his Bank and give them a piece of my mind as how he has been treated.

Thanks any help much appreciated

silv.surfer

I didnt realise these pages moved so fast

Hopefully this will move to be noticed - I really want to help my Friend sort this O/Draft that he doesnt understand how to get rid and myself not having experiences with O/Drafts versus Loans cannot advise him without getting more information.

Please read my initial post to understand the circumstances.

Thanks for any advice I can pass on. I am just waiting to get down the Bank I am sure they are having him over - should he be paying what I believe is Insurance on an O/Draft - he hasnt asked for any - if it is could he get it back on this PPI claim thing.

Thanks for any help :beer:

savingforarainyday

Bumpety Bump

silv.surfer

Thanks savingforarainyday :beer:

Bumpty bump - getting the hang of this

Still need advice how to best get this 1K O/D shifted - their charges keep putting him over limit and I am sure they are charging seperate £8 month Insurance he doesnt know about - can he reclaim PPI

Can anyone help me advise my Neighbour. Full circumstances in initial post.

silv.surfer

Bumpety Bump

Wannabefree1

I've seen your message floating around unanswered and which I could give you some sound advice.

Just wanted to say the £8 sounds like a standard bank service charge or over limit fee?! I think it's unlikey to be insurance. The other amount sounds like the overdraft fee interest charge.

Best thing is to try and get him a buffer under the overdraft limit to prevent the charges taking him over the limit.

I think the standard advice is an overdraft should be seen as short-term. At least with a loan you get a repayment plan and no exactly what you're paying back over the term including the interest. However whether this is the best option for your neighbor I have no idea!

Hopefully someone with more knowledge will be along to help you.

silv.surfer

Thanks for coming to my aid Wannabefree1

As you can see I am luckily not familiar with the O/D scene - sorry not to have looked at my Thread earlier but I got used to seeing nothing and last few days things have been hoting-up with our anti 0844 GP number campaign so been very busy.

I will be seeing him Sat to see if he has got Nov Statement to assess the damage JSA Sanction 2 weeks has done.

How do you put a buffer on O/D - He tells me Bank has taken back Cash Card so has to go to Counter for cash - will ask him Sat how/if it shows how close to Limit - he gets £137 per fortnight and always draws less but doesnt know when they are going to put charges which takes over limit again.

What I was trying to find out is the costs of changing O/D to a 1K Loan with another bank and an Account with only usual £100 or No O/D
I have read this action on some other threads and wondered if this would be the best way for him.

Thanks again for your help and picking up a floater :beer:

katsu

I think your friend will struggle to get a loan with no income other than benefits.

You could see if there is a credit union in your town and whether they would give him a loan (probably needs to save with them first for a while).

I'd suggest that you and he visit the bank and ask them to explain when the charges get applied each month - or can he show you his last few bank statements? Then you can help him work out how much money he can take out without incurring more charges.

I'd also suggest the £1k went somewhere so maybe he needs some help with his budgeting?

Hope these thoughts give you some ideas.

silv.surfer

So sorry katsu not to have answered sooner, but I havent been very well and being woolly headed with cold meds and only just coping with Meetings and then my voice goes AWOL embarassing. Cant have that happen at the Bank

Hopfully after Xmas I will be fit enough to go to his Bank - I am going to try to get some of the Charges back because it was those that were puting him £1 or £1.50 over limit

He is just coasting in Netrual and I will be tackling the Bank about the best way for Him not the Bank to get this 1K O/D paying off on JSA.

I will be back after Xmas when I feel less woolly. Bank look out.

silv.surfer

Spoke to my Friend the other day -feeling a little less woolly - He doesnt appear to get proper monthly statements with Bank name etc and I forget to ask - I now have a copy of Nov Transactions this looks to me like a over the counter print out. - He has to get his money at counter they have removed his card.

The £8 is definately Payment Protection indicated and the £14.61 is indicated Interest charged.

He didnt know anything about any PPI or what this £8 was so I need to find out how far back it was applied - I believe I need him to apply for SAR and what documents apply to it. If they told him to sign he would have, not knowing what it was, just because they would have told him to do it.

People on site dont seem to have heard of PPI applied to O/D -If genuine then perhaps he should have claimed when was Redundant 4 years ago.

His JSA is back on and Housing Benefit but he has found that due to Council error Council Tax Benefit was not attached at same time and now want £70 Council Tax

He is having JSA as Giro until after Xmas but he will have to put in £25 Monday to pay these charges to stay under llimit as is now.

I will have a go at getting these print outs back to start of the PPI
I dont think they can object or charge as they have not been sending proper Statements.

Please have a look at what I am proposing and say if you think I am on the right track so far.

Thanks

silv.surfer

Bumpety Bump - am I on the right track - My Friend says he thought that all D/D s were cancelled back when he was made Redundant on 1st Jul 2008 and didnt know that £8 was not calcelled as requested so I am going to get him to put in a Claim for PPI - it is only about £400 but will go a long way to cut his O/D back to £500 then he can pay it off over time - if he can reduce the 1K O/D to £500 that should cut the Interest charge from £14.61 to about £7.30 ish

I think he has done very well to pay off most of his Loans on JSA