HELP!! Overdraft suddenly been reduced

KT2802

Newyorkdreams wrote: »

Hi KT - I just wanted to let you know that due to your post, I'm going to prioritise paying off my overdraft as a priority debt (£1500) and have started with £50 this month. I want you know your misery has not been in vain!!!

Thanks

NYD

Thanks New York Dreams - well done, sounds like a good plan. I am going to call the bank tomorrow, feeling very anxious about it but once I know for definite what is going on, I can make a plan

Newyorkdreams

Well done KT, let us know how you get on! I will be thinking of you.

NYD

NinjaSavingKat

Just to add my tuppence worth ... I had the same kind of letter from them a few years back. They just send this kind of letter because they have to. They won't reduce it by that amount if you just talk to them. I had my reduced by £20 a month but managed to wipe it off entirely a few months later.. have a chat - they are generally really helpful and will happily set up an arrangement for you!

stationeryspender

I just wanted to wish you luck KT. I have noticed that more people are having similar issues around overdrafts recently & which bank was it last month who were going to start charging an extra fee on top if you have an arranged overdraft? Is one of your credit cards Virgin by any chance? They do super balance transfers into your account, which even if it wasn't much more than a couple of hundred should help when you are renegotiating with Nationwide. It might be worth reading the article on super balance transfers to check.

KT2802

Thank you all so much for your words of support. It really helped me to face ringing them, which I have just done.

Basically, they told me that I have to reduce the overdraft to £1050 within a year so I am doing this by paying £80 a month plus interest charges (approx £100 a month). This will just about be manageable but means I won't be able to overpay any of my other debts for the next year.

This is an arrangement to pay but the lady on the phone assured me that this won't have a negative effect on my credit rating unless I default on these payments. Does anyone know whether this is true or not? I guess it is irrelevant anyway because I don't have any other choice, I have to make these payments as I can't afford to give them it back in a lump sum.

I think what I am going to do is continue to have my wages paid into this account and have bills go out of there but then open another account and transfer money for food etc into this one, so I have another account just in case. Although I was also thinking maybe I should still have my wages paid into this account and then transfer it all out to a different account and have bills go from the new account too? Decisions!

matttye

KT2802 wrote: »

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.

The problem is that overdrafts are not supposed to be long term loans, i.e. each month you should pay back the overdraft in full, then use more again next month if necessary. I think the bank expects you to be able to repay your overdraft quickly because it should only be used for short term borrowing needs. The only way they'll know you can't repay it quickly is if you contact them.

If you contact them and explain you can't pay it all back within three weeks they might agree a repayment plan instead.

gizmo111

KT2802 wrote: »

Thank you all so much for your words of support. It really helped me to face ringing them, which I have just done.

Basically, they told me that I have to reduce the overdraft to £1050 within a year so I am doing this by paying £80 a month plus interest charges (approx £100 a month). This will just about be manageable but means I won't be able to overpay any of my other debts for the next year.

This is an arrangement to pay but the lady on the phone assured me that this won't have a negative effect on my credit rating unless I default on these payments. Does anyone know whether this is true or not? I guess it is irrelevant anyway because I don't have any other choice, I have to make these payments as I can't afford to give them it back in a lump sum.

I think what I am going to do is continue to have my wages paid into this account and have bills go out of there but then open another account and transfer money for food etc into this one, so I have another account just in case. Although I was also thinking maybe I should still have my wages paid into this account and then transfer it all out to a different account and have bills go from the new account too? Decisions!

I would open a new account elsewhere with no overdraft and trnasfer everything to it - then pay the £80 per month just as you would with any other debt. They couldeasily change their mind and withdraw the facility on any given payday, leaving you in a bit of a pickle.

Newyorkdreams

I'm pleased you've got this sorted KT! Well done for facing it.

NYD x

backinbusiness

An arrangement to pay WILL negatively affect your credit file.

KT2802

backinbusiness wrote: »

An arrangement to pay WILL negatively affect your credit file.

:mad: Do you know if it is the same as having a default on there? Not a lot I can do I guess I am not planning on applying for any credit in the near future anyway. My main concern is about whether it will cause me problems when I move to another rental property if they do a credit search.


Thanks NYD. I am glad it is sorted.

Gizmo - I think I might do this although I am concerned that this may then prompt them to reduce the entire thing very quickly. I have been told that they will send me a letter outlining the agreement so I would hope that this is some sort of contract where by they can't suddenly change their mind without giving notice, but I may be wrong.