2weeks to pay back overdraft-can banks do this?

lemonmelon32

In January I received a letter from my bank stating that they are reducing my £3K overdraft to £2k and I have 2 weeks to clear it. I have been a loyal customer for 16 years. When I phoned them to query this they said that I had two choices-coming up with £1k in 2weeks or paying them £90 a week. There's no way I could do either. Are banks within their rights to do this? They said that all overdrafts are reviewed every 6 months and it can happen at any time. Please advise

molerat

Yes, an overdraft is for very short term borrowing and, according to the T&Cs, is "repayable on demand". Long term use of an overdraft with no reduction / payment plan is looked on as poor financial management. The bank have now decided that their money is at risk so have decided to pull the plug on at least part of it.

patman99

Yes, they can.

The overdraft is provided as a way of providing extra cash if needed, not as extra free money.

You should never treat the overdraft as 'your' money because it isn't and the bank can withdraw the facility any time they like.
They usually withdraw overdrafts from people who constantly live in them and have no financial accumen.

You could always write to them with a letter of complaint stating that 2 weeks is too short notice to bring the account back under control and that you wish to reduce the overdraft by £50 per month instead as this is manageable.

If they refuse, complain to the FCA.

enthusiasticsaver

Unfortunately yes they can. Have you suffered a reduction in income through this account recently?

tlc678910

Hi, if your credit rating is ok there are credit cards with long 0% interest deals and some allow you to transfer money into your own bank. I saw an ad for 36 months with virgin (there is a fee). Then you could pay the £1000 back at a steady pace?

sourcrates

Your other option is to open a new basic bank account, with a bank you don't have any debts with, use that for your day to day banking, and treat the account with the OD. as you would any other debt.

Offer them what you can afford to repay each month, also ask them to suspend interest and charges, and pay it off that way.

[Deleted User]

I agree with sourcrates; get a basic account elsewhere and have your salary paid into that. Then deal with the overdraft on your terms. If they've reduced your overdraft now, they might very well cancel your 2K overdraft, and then you would be up a certain creek without a paddle.

lemonmelon32

Thank you for your messages. The way I have dealt with it is to get out a 0% interest credit card and moved the debt to the card. I think 2 weeks notice is unreasonable straight after Christmas. Yes I have suffered a drop in income recently. I am looking into reclaiming bank charges and thinking of starting a new account. Many thanks for your advice everyone.

Westie983

Unfortuantly the T&Cs of any bank account says overdraft can be removed at any time, as its the banks money, if they see you living in the overdraft with limited or low income coming through the account they see your account a risk and thus their money so withdraw the facility,

this has happened on my student account as I no longer pay into it, so they are withdrawing the OD and i have till end of the month to pay of 2k....

glad you got advice and that you have it sorted using a credit card, can I ask how you have managed to get the debt from a overdraft to the credit card as Martin Lewis always says this is hard to do....

Thanks in advance..

chrisw99

Westie983 wrote: »

glad you got advice and that you have it sorted using a credit card, can I ask how you have managed to get the debt from a overdraft to the credit card as Martin Lewis always says this is hard to do....

Thanks in advance..

Not sure how the OP did it, but there are 3 ways I can think of..

1. The obvious way... use your credit card all the time instead of your debit card, until your bank account is in the clear and your CC has the debt on it. Takes longer, and the APR on the CC balance will be at the standard rate.

2. The best way... get a CC that has a money transfer offer so you can transfer money direct to a bank account. Usually has a promotional rate APR.

3. The cheeky way. Do a normal balance transfer between credit cards but transfer a lot more than your balance on the destination one. It will go into credit. Phone up that provider and say you've accidentally taken your card into credit, they'll refund it to a bank account. If the new card is a 0% deal, even better, you've shifted it to a 0% rate for a bit

3 will probably be frowned upon, but does work as I've just accidentally transferred a lot more by accident and really wanted them to transfer it back to the original card but they couldn't do that, they had to refund credit back to a bank account.

happy_bunny_2

lemonmelon32 wrote: »

Thank you for your messages. The way I have dealt with it is to get out a 0% interest credit card and moved the debt to the card. I think 2 weeks notice is unreasonable straight after Christmas. Yes I have suffered a drop in income recently. I am looking into reclaiming bank charges and thinking of starting a new account. Many thanks for your advice everyone.

Do complain, the FOS have upheld cases where the OD has been reduced in an unfair way.

Are the charges on the same account?

I would get a new account elsewhere.