HELP!! Overdraft suddenly been reduced

KT2802

Hi all,

I have banked with Nationwide for years and have a large amount of debt (see sig). I have a £2000 overdraft with them which I am always using - my wages get paid in to this account every month which almost clears the overdraft and I then use the overdraft to live on for the rest of the month. I realise that this is not a great way to manage my finances but I haven't had much choice recently.

I once paid the overdraft off fully (when I got a loan to clear my debts - I know bad idea as it didn't help as I stupidly got into debt again. I never go over my overdraft or miss payments on things but I have received a letter today saying that Nationwide will be reducing my overdraft by £1000 from 13th May :eek::eek::eek:

I realised that the overdraft was repayable on demand but I am shocked at how quickly they are requesting the money. I am also surprised that they have reduced it so much when this has never happened before. I checked my credit rating and it is 'average' - I think this is because of the amount of debt that I have, because as I say I never miss payments etc.

I am now extremely concerned about what I am going to do. I am planning on contacting Nationwide on Monday and asking them whether I can reduce the overdraft gradually - say £50 a month - because I can't just suddenly lose £1000 (I know it isn't my money in the first place but I have relied on this facility for the past few years).

What advice do people have? I am feeling very scared!

KT2802

Sorry guys I didn't realise there is a separate bank accounts board. Would be grateful if this could be moved there if more appropriate. Thanks.

happy_bunny_2

They might help you, or realise you are desperate and reduce it earlier to avoid you drawing out the funds.

If you do draw out the funds, and get another account to get your pay put into, likely get a default which will stay on file for 6 years.

Good luck

HB

nearlyrich

I think this is the better place for your post so I will leave it here for now.

KT2802

happy_bunny wrote: »

They might help you, or realise you are desperate and reduce it earlier to avoid you drawing out the funds.

If you do draw out the funds, and get another account to get your pay put into, likely get a default which will stay on file for 6 years.

Good luck

HB

That's what I am concerned about. I don't know whether to call them to ask or if to take the money first and then ring them just in case. I really don't want a default on my file and would be prepared to get another loan of £1000 to avoid this but I don't think that will be an option.

If I do get a default, would it just be the one? Could this then impact on my other debts such as credit card limits being reduced?

Thanks

ValHaller

KT2802 wrote: »

That's what I am concerned about. I don't know whether to call them to ask or if to take the money first and then ring them just in case. I really don't want a default on my file and would be prepared to get another loan of £1000 to avoid this but I don't think that will be an option.

If I do get a default, would it just be the one? Could this then impact on my other debts such as credit card limits being reduced?

Thanks

Your credit cards are not such an issue. If they reduce your credit limits, then that will stop you putting more on the card, but you will only have to pay back according to the current minimums.

In your position, I think I would try to negotiate more gradual withdrawal of the overdraft - £50/month might not cut it, £200/month is nearer the mark - to a lower level such as £500 - and possibly postpone the reduction for a month.

Th1984

I had a similar problem with nationwide in 2006.

Had a 2k overdraft and wasn't ever getting into the black.
I got the letter and called them. Told them I couldn't afford it in one month and we came to an agreement that the limit would reduce by £100 per month for 20 months.

all worked out and I don't think it ever negatively affected my credit file as I have never struggled to find credit since.

Communication with them may be the easiest way out.

KT2802

Th1984 wrote: »

I had a similar problem with nationwide in 2006.

Had a 2k overdraft and wasn't ever getting into the black.
I got the letter and called them. Told them I couldn't afford it in one month and we came to an agreement that the limit would reduce by £100 per month for 20 months.

all worked out and I don't think it ever negatively affected my credit file as I have never struggled to find credit since.

Communication with them may be the easiest way out.

That reassures me a bit. I could just about afford to give them £100 a month at a push. I think I will also open an account elsewhere and have wages paid into this. I understand that an overdraft is repayable on demand and that I shouldnt always be using it etc but I think it is unreasonable for them to expect people to be able to pay back £1000 within 3 weeks.

ValHaller

KT2802 wrote: »

I think I will also open an account elsewhere and have wages paid into this.

Beware that this could prompt immediate withdrawal of the overdraft entirely once you are noted not to have a salary. I suggest if you do get your salary paid elsewhere, you still transfer in enough to cover your DDs and whatever else you agree as overdraft reduction, but take the rest of the spends from the new account. Also, as credit cards do not pull the rug from under you in the same way as the overdraft, you need to think about transferring your overdraft to your credit cards by making every day expenditure on the cards and religiously paying the cash you would have spent to pay down your overdraft.

It is a lesson to take note of. The normal DFW advice is to pay down debt in Interest Rate order. But the very first debt to pay down is your overdraft, because having it taken from you can put you at risk of taking a default if the rest of your finances cannot cover the overdraft.

edit: If you stop overpaying other debt, how long will it take you to clear the overdraft? From your signature it looks like you have cleared £6122 in 4 paydays and you stand a fair chance of being able to absorb the reduction in overdraft over 2 paydays..

Newyorkdreams

Hi KT - my gut instinct would be to contact Nationwide and ask for them to reduce your overdraft gradually. I also wanted to say that my situation is exactly the same as yours - my overdraft is £1500 - and my wages get paid in and I always spend up to the limit on my overdraft. I've been snowballing our debt for the last few years and my overdraft is quite far down the line to be paid off (roughly towards the end of next year) as it's quite a low APR but this has really made me think about this. I would be in dire straits if my bank reduced mine. I don't think they will because they are making money off me but it has happened to you so it may happen to me also!

I hope you get sorted soon and is terms that are agreeable with you.

Congrats on managing to pay off over £6000 since January - that is amazing!

NYD

Newyorkdreams

ValHaller wrote: »

It is a lesson to take note of. The normal DFW advice is to pay down debt in Interest Rate order. But the very first debt to pay down is your overdraft, because having it taken from you can put you at risk of taking a default if the rest of your finances cannot cover the overdraft.

QUOTE]

Thanks ValHaller - this is really helpful to know. NYD