Beware First direct 250 interest free

meer53

sjw3915 wrote: »

Please see below an extract of the email they sent me.

"To clarify, all 1st Accounts benefit from a £250 interest free element, even those without a formal facility. Any balance over £250 debit incurs debit interest. However, any formal facility or informal increase costs £25. I would like to further clarify that all formal facilities incur a £25 Arrangement Fee, even with new accounts. If a customer does not request an alternative amount, and we are happy to agree the facility, then new accounts receive a £500 formal limit. Even so, this facility incurs a £25 Arrangement Fee when the account is opened.

This quote relates to "arrangement fees", not to fees per transaction.

sjw3915

Meer 53, I think you've got it right. Almost! The fees per transaction are for when you don't have a formal facility but i don't believe the 250 overdraft is automatically formal. . Here is a brief account of one of the calls so you can get an idea of the confusion...
Me- i've got charges on my account i thought you said i had a 250 pounds interest free overdtaft
them- you have
me-no i obviously havent
them- You have!
me- Why have i been charged then?
them- Because it only says interest free. you havent paid any interest have you?
me-no i haven't but i have been charged 25 pounds each time ive used it
them- That's right!
me- But how can you go on about it being interest free, which saves a few quid, when you have to pay loads to use it?
them- that's because you haven't got a formal overdraft
me- but you said I have got a 250pounds interest free overdraft!
them- You have, but its not a formal overdraft. If you want one of those you have to pay a £25 arrangement fee.
Me- Even for new customers?
them- Yes, even for new customers. They normally get a 500 pounds formal limit.
Me- but they have to pay a £25 pounds arrangement fee?
them-Yes and they don't pay interest on the first £250
me-but its free to use otherwise
them-yes
So--- new customers get a 250 pounds interest free overdraft. This in itself would not appeat to be a formal facility, because all formal facilities are chargeable with a 25 pounds arrangement fee. What perhaps happens is that most people get a 500 formal facility (which they should pay for, but first direct usually waive i believe) and so the 250 interest free overdraft is automaticall fee free as well because it is covered by the 500 pound formal arrangement. I would be interested in your comments

sjw3915

Happy to correct meer 53 that you are right the 250 interest free overdraft is a formal arrangement. Although this was the call that took place, in their last reply they did mention human error and did refund all charges. Apart from this incident, I actually rate First Direct as you can speak to someone from this country 24 hours a day.