MSE News: Halifax to raise overdraft charges for customers deep in the red

pinkdalek

YorkshireBoy wrote: »

Your situation occured "years ago" (when the Halifax EAR was 15.9%?). If that situation were to occur now (or at any time since late 2009 when Halifax went to £1/day for authorised overdrafts) then the same borrowing would equate to around 26% APR.

Overdraft is still generally a cheaper way of borrowing if you plan to repay it back over a short term, especially if you need cash upfront to pay for the facility you need.

Back to the original article which is no more than a Daily Mail type issue, it does not address what to do about it, to consolidate if you are "living" in your overdraft. And also this bank is giving its customers almost a whole 6 months notice to do something about it.

It's strange but when Halifax decided to change its charging structure on their current accounts i.e. remove failed item fees (£30 per item) the press did not seem to advocate such a move. Key is to stay on top of your finances, register with their text alerting service which advises you of when you are near to or over your overdraft limit and thus helping you to pay less in bank fees.

YorkshireBoy

pinkdalek wrote: »

Overdraft is still generally a cheaper way of borrowing if you plan to repay it back over a short term...

I agree. And sometimes even if you can't pay it back straight away the chances are your monthly salary will place the account back in the black for a few days each month...meaning, in the case of Halifax, a lower number of £1 daily charges.

Velvet_03

For people like me, who due to circumstances beyond my control, live in their overdraft (mine is currently at £10,000), the increase in charges is going to make it almost impossible to pay back what i owe.

I know some of you may judge people like me for the amount of debt they have, but in my case my relationship broke up and I had to move out on my own with nothing. I was then made redundant and had to settle for a job that pays far less, so I had no choice but to borrow money (i was refused a loan, so overdraft was my only option).

Halifax are coming down hard on us, but all it's doing is throwing me into bankruptcy. I'm not sure if this benefits them

opinions4u

Velvet_03 wrote: »

For people like me, who due to circumstances beyond my control, live in their overdraft (mine is currently at £10,000), the increase in charges is going to make it almost impossible to pay back what i owe.

I know some of you may judge people like me for the amount of debt they have, but in my case my relationship broke up and I had to move out on my own with nothing. I was then made redundant and had to settle for a job that pays far less, so I had no choice but to borrow money (i was refused a loan, so overdraft was my only option).

Halifax are coming down hard on us, but all it's doing is throwing me into bankruptcy. I'm not sure if this benefits them

An extra £30 a month isn't going to be the difference between bankruptcy or not.

Consumerist

Velvet_03 wrote: »

Halifax are coming down hard on us, but all it's doing is throwing me into bankruptcy. I'm not sure if this benefits them

Correct me if I'm wrong but a £1095 pa overdraft charge on a £10k overdraft amounts to the equivalent of about 11% pa interest. Repayments on a £10k loan would be far more than that, wouldn't they?

dbinq

I think some of you have rose tinted glasses on.

Some people are struggling at min, lower paid jobs etc redundancys etc who are more than likely desperately trying to get out of debt, so for Halifax to double their charges is not going to help them, Halifax know that these kind of people are going to struggle to switch accounts or get loans, so are hitting them with these charges.

The government seem to keep saying that the banks are greedy but the bank that they partially own seem to be worst offenders.

Consumerist

Someone has to pay for the cost of PPI so the banks probably see those with hefty overdrafts as the easiest targets.

If you expect the worst from banks, you are unlikely to be disappointed.

JuicyJesus

Consumerist wrote: »

Someone has to pay for the cost of PPI so the banks probably see those with hefty overdrafts as the easiest targets.

It's more a credit risk thing in my view. Halifax seem to have MASSIVELY overextended themselves with overdrafts (which are a very high credit risk product indeed, as a lot of people abuse them and they remain a static debt) and want to subtly nudge their customers towards repaying their borrowing.

meer53

If people are genuinely struggling to manage and are paying these fees, there is a solution. Call your bank and talk to them. Don't just keep on using the overdraft and paying fees, open another basic bank account (with no overdraft facility) and make an arrangement to repay your debt with your bank. Your account will be closed, and it will affect your credit file, but at least you will be able to draw a line under what you owe and make monthly repayments which you can afford. The interest rate on this arrangement will probably be much lower than any loan or overdraft and you can make a fresh start with a new account. It will probably mean making cutbacks on everything but the essentials but surely it's better to do this than just let the debt grow bigger ?

Consumerist

Whilst I accept the thrust of the above points by JuicyJesus and meer53, I think what seems unfair about the current state of affairs is that overdraft charges are disproportionately loaded against those with small and occasional overdrafts in favour of those with large and consistent overdrafts; the latter group, however, would seem to be the greater credit risk.