Advice on OD on behalf of someone else...

sistafromanothermista

:wave:
Morning
'm just after a bit of advice and guidance for my sister and her boyfriend.
OD is £1500. First question, when the bank (Barclays) bank charge due to no money in the account (he is right upto the £1500 limit) what happens? If the limit is £1500 can it go over this amount with the charges? (Sorry if this is a thick question!)
Secondly, they want to pay this off but are finding it nearly impossible with all the bank charges every month.

What is the best course of action? Open a new account elsewhere?

John1993_2

Yes, the charges can take the account over the limit. The limit is not actually a cast-iron maximum, it's rather the maximum that you are allowed before being hit with penalties. If you have a DD coming out, for example, that takes you over the limit, the bank has the choice of rejecting it, or accepting it and penalising you.

If the charges are for repeatedly exceeding the limit, then they need to either live like monks for a few weeks, until the overdraft moves away from the limit, or find a cheaper source of credit, or even just ask for the overdraft to be extended.

Haave they tried asking for a £100 extension, if iit's really only the charges that have caused them to be in their preidcament?

I must ask, if it's only the charges causing them problems, how did they end up running up to their limit in the first place? It sounds like they maybe have underlying issues with their budget that will also need to be looked at.

Tixy

Hi

Yes bank charges can send him over the overdraft limit, often then incurring further charges for being overlimit.

How much is he being charged in a month typically?

I think he really needs to look at his income & outgoings and work out how much he can put towards this debt each month. If he has a month of being super frugal hopefully that could get him away from the limit and then he will find it easier to stay within the limit and minimise fees.

If he contacts the bank and explains he is trying to sort things they may be willing to refund some of the charges as a goodwill gesture.

Opening a new account may be an idea if he has other priority debts that he needs to pay first, but he will still likely incur the charges on the bank account, and could potentially risk the whole overdraft being recalled by barclays.

sistafromanothermista

John1993 wrote: »

Yes, the charges can take the account over the limit. The limit is not actually a cast-iron maximum, it's rather the maximum that you are allowed before being hit with penalties. If you have a DD coming out, for example, that takes you over the limit, the bank has the choice of rejecting it, or accepting it and penalising you.

If the charges are for repeatedly exceeding the limit, then they need to either live like monks for a few weeks, until the overdraft moves away from the limit, or find a cheaper source of credit, or even just ask for the overdraft to be extended.

Haave they tried asking for a £100 extension, if iit's really only the charges that have caused them to be in their preidcament?

I must ask, if it's only the charges causing them problems, how did they end up running up to their limit in the first place? It sounds like they maybe have underlying issues with their budget that will also need to be looked at.

100% poor money management. They now have another baby on the way so clearing this OD is vital before it arrives.

Could the account be closed with Barclays bearing in mind the OD?
They could then get wages paid into a new account and pay extra off the OD every month without wages etc being swallowed up.

John1993_2

sistafromanothermista wrote: »

100% poor money management. They now have another baby on the way so clearing this OD is vital before it arrives.

Could the account be closed with Barclays bearing in mind the OD?
They could then get wages paid into a new account and pay extra off the OD every month without wages etc being swallowed up.

Well, it can be closed, but only if they pay off the overdraft first...

If they are caught in a vicious cycle of fees, then they need to have a sit down with their bank and ask for some help. Barclays are really not in the business of "trapping" people like this, and are very likely to help out if it's in exchange for a commitment to start clearing the overdraft entirely, within an agreed timescale.

Are they really in a position to clear the O/D before their new arrival?

sistafromanothermista

Possibly, if the charges stop.
It seems like a vicious circle!