Bank suddenly halved my overdraft limit

No1Alicat

I have had an agreed £4000 overdraft with my bank for a couple of years, and have been using this to its maximum for the past few months because of a few problems. I have now had a letter giving me 15 days notice that my limit is being reduced to half of that. I am paid monthly, have monthly commitments including mortgage and childcare, and this seems incredibly unethical of them. I have phoned their helpline and explained firstly the circumstances which got me into this position, secondly that if they look, the amount I have overdrawn by has reduced the past 2 months because I have been living as frugally as possible to begin making inroads into it and thirdly that not only is my childcare going down significantly in September when my youngest child starts school but that my salary is also being reviewed then.

I'm a single mum, am under a huge amount of pressure at the moment because of various things, which is causing me immense amounts of stress as it is and furthermore I have no way of finding £2K in the next 2 weeks.

Any advice?

Dylanwing

A few posters have been worried that this might be the Banks next tactic to rein in debt, although as in your case, it drasically increases the chance of the Bank losing money. Can you name and shame the Bank please.

No1Alicat

Yes - Halifax.

I did claim back some charges a few months ago - my employers didn't submit my expenses cheque on time (it was for just under £2K that month) and I didn't notice until I received a letter telling me about the charges.

Lesson learnt - I now check my account online every couple of days, obsessively!

So how do I get out of this situation without either starving my kids or doing great damage to my credit rating?

meme_3

No1Alicat wrote: »

I have had an agreed £4000 overdraft with my bank for a couple of years, and have been using this to its maximum for the past few months because of a few problems. I have now had a letter giving me 15 days notice that my limit is being reduced to half of that. I am paid monthly, have monthly commitments including mortgage and childcare, and this seems incredibly unethical of them. I have phoned their helpline and explained firstly the circumstances which got me into this position, secondly that if they look, the amount I have overdrawn by has reduced the past 2 months because I have been living as frugally as possible to begin making inroads into it and thirdly that not only is my childcare going down significantly in September when my youngest child starts school but that my salary is also being reviewed then.

I'm a single mum, am under a huge amount of pressure at the moment because of various things, which is causing me immense amounts of stress as it is and furthermore I have no way of finding £2K in the next 2 weeks.

Any advice?

Ours was withdrawn completely!
BUT after speaking to them, they reinstated a large chunk of it - albeit with certain conditions attached (cheque books and debit cards were withdrawn, but they agreed to a reduction of £100 per month instead of the whole lot in one fell swoop!).
So your £4000 would be £3900 next month, £3800 the following month etc.

Main drawback - had to phone and ask for money on the day of salary deposit, then collect all but £100 in person at the local branch.
Paid immediately into another account (already established) in order to live for the rest of the month.

You need to speak to them asap - and to provide a comprehensive state of affairs so that they can assess your case.
Anticipated increase in salary - or even a known bonus due, in our case - was not sufficient. They want to know what you're paying out, and where???

Bank in question was Abbey, BTW.

No1Alicat

I guess the other thing I need advice with is how can I manage this as cheaply as possible too? They are charging me £40 a month interest on the OD.

Could I open another account elsewhere and get everything paid in there and then just pay a bit into the Halifax every month?

The thing that REALLY made me fume, was when I phoned the helpline, just after the woman I spoke to said they wouldn't reinstate the full overdraft limit, she suggested I consider the offer they have on their credit card at the moment - 0% interest on balance transfers and new spending.

Would the Banking Ombudsman be of any use here? Even if they can't consider my complaint quickly enough to be of immediate use, I still think Halifax have acted unethically and unfairly and are putting me in a potentially even more precarious situation.

meme_3

No1Alicat wrote: »

Could I open another account elsewhere and get everything paid in there and then just pay a bit into the Halifax every month?

I don't see why not - though I was scared to do that myself - because I thought they might withdraw the arrangement that we had to pay back that £100 per month.

Dylanwing

If they will offer you a credit card with 0% that might be the answer - Only thing is that credit cards are not easily got these days, so they may offer it with one hand and decline it with the other. If they do accept you, move the overdraft there, then get a proper Bank Account elsewhere.
Another solution may be to try and get an unsecured loan so that you can pay it off over a longer period in a structured way, and it may be cheaper than what Scabifax are charging.
Regarding moving elsewhere and paying back the current account, it may get messy with charges and they will probably withdraw the rest of the od. to make it even messier.
Talking to call centres can be a waste of time, it might be worth checking out the complaints procedure on line, and write/ fax setting out exactly why you cannot repay £2,000 in one go (As if many of us could!), and making an alternative Monthly reduction based on income and expenditure. If you treat this as the final part of the complaint (Make this clear to Hfx), you can then go to the Ombudsman. As I am sure the "pro-Bank, quote the T&C's" mob will point out, you may not have a case, but at least it will cost them £450!
I think it is a case of checking out the options and choosing what is best for you personally - My experience of Halifax has always been bad, so I would not rely on them helping you. You could try talking to a few other Banks and see what they might be prepared to offer.
This really is scary, and regardless of T&C's, totally unethical, and likely to cause untold misery if the practice spreads. Martin, we need a big hitter to shame the Banks in the Press before they all start doing this!
Alicat - Good luck, keep us posted!

MarkyMarkD

No1Alicat wrote: »

Yes - Halifax.

I did claim back some charges a few months ago - my employers didn't submit my expenses cheque on time (it was for just under £2K that month) and I didn't notice until I received a letter telling me about the charges.

Lesson learnt - I now check my account online every couple of days, obsessively!

So how do I get out of this situation without either starving my kids or doing great damage to my credit rating?

Lesson learnt? I don't think so.

Your expenses were paid late, and rather than reclaiming the bank charges from the employer - whose fault they were - you for some reason had a go at the innocent bank.

And then you wonder why they reconsider your overdraft limit?

Banks can withdraw overdraft approval at any time, for any reason. They have to give you reasonable notice, but that's all. An overdraft is by its very nature discretionary.

You shouldn't have ever been running a long-term £4,000 overdraft position - you should have taken out a loan for this sort of amount, for this sort of time. Overdrafts are an expensive and inappropriate means of funding anything other than very short-term debt.

If you have a regular monthly salary, there's no way you will find it a problem to get a personal loan for £2,000, so I don't understand why you make out you have "no way" of reducing your overdraft within that timescale. Most personal loans will be agreed, and cash in your hand, within a week.

dunstonh

Would the Banking Ombudsman be of any use here? Even if they can't consider my complaint quickly enough to be of immediate use, I still think Halifax have acted unethically and unfairly and are putting me in a potentially even more precarious situation.

What has the bank done wrong? Nothing. So there is no complaint to answer.

Overdraft limits are not a constant and can be kept under review. If the bank feels it can no longer offer you a facility, it can reduce it.

A long term overdraft of £4,000 suggests an inability to reduce the debt and at this time banks are being encouraged by the Govt to reduce high risk debt. When I worked for a bank a long time ago, we used to get a printout report on long term overdrafts with a view to getting them down. When interest rates were low and economy was good, it wasnt a priority. When rates rose and the economy looked like it was taking a turn for the worse, we would reduce the long term cases.

£4,000 is not a lot and converting it to loan shouldnt be a problem. It would be cheaper as well.

iceicebaby

Overdrafts are repayable on demand so the bank has done nothing wrong

pfpf

No1Alicat...this post may have been better served in the DFWB board where people tend to help not judge regardless of right or wrongs.

good luck.