Interest Free Overdraft Nationwide FlexDirect-Be Warned

Harryo

Nationwide Customer Adviser suggested late last year I change my FlexAccount to a FlexDirect. Said I could have an overdraft interest free for a year. Lovely Jubbly I thought and made the due change.

Started to use my £5000 overdraft up to the maximum limit and all has been fine up to a week ago. I payed in thousands over the few months but immediately transferred all amounts , except for DD's, to other accounts so that I would have maximum benefit of the free interest.

Got a letter to say they cannot maintain the arranged overdraft at its current limit and advised the overdraft would be reduced to £2000 in two weeks.

Phoned up and was advised that it was because I had used the overdraft facility that they were reducing it. It would seem they give you a carrot but only allow you to have a little nibble of it and not a big bite.

They would not budge other than they were prepared to consider me reducing the overdraft in steps but that would be entered onto my Credit Rating Files, which to me was not an option.

It is strange but I also got a letter from Barclays the same day. They said that because I had not used my old Woolwich £16000 Mortgage Reserve for some time that they would be reducing it. But they were going to do it after two months, which seemed a reasonable time. However, I phoned them up and asked if I could keep it at the current level and they immediately agreed.

I am lucky that I can find £3k in two weeks but I do feel sorry for anyone who is tricked into false security and cannot afford the escape. Be warned, if you would be in that situation.

Hazzanet

Overdrafts are for short term borrowing. Sitting at or very near your maximum limit for long periods of time tends to raise a red flag to lenders who see you as a habitual borrower and they begin to reduce the limit to mitigate their risk.

Surprised they haven't tried to sell you a loan to move the overdraft to.

grumbler

Harryo wrote: »

...I do feel sorry for anyone who is tricked into false security and cannot afford the escape. ...

All overdrafts are repayable on demand, so you can never feel 'secure' with any bank when being overdrawn, especially to the tune of £5K.

MABLE

When I had my first Flex direct account the overdraft was about £3000 and had it interest free for a year and transferred into a saving account. However they never suggested it would be reduced.

Must depend on the customer. Only guessing of course!

jimjames

If you have left a massive overdraft with no payments coming in what else do you think the bank would look to do?

GingerFurball_2

So you've run up a £5k overdraft, stopped funding your account and you're surprised the bank wants some of their funds back?

colsten

MABLE wrote: »

Must depend on the customer. Only guessing of course!

Quite, we can all only guess.

Another guess would be that they changed their policy because they got fed up with stoozers. Or it was a random reaction by the person who reviewed the overdraft. Fact remains that overdrafts can be called in at any time, even without notice. That's the same at all banks, so the OP should be greatful they were left with £2K to stooze.

MABLE

colsten wrote: »

Quite, we can all only guess.

Another guess would be that they changed their policy because they got fed up with stoozers. Or it was a random reaction by the person who reviewed the overdraft. Fact remains that overdrafts can be called in at any time, even without notice. That's the same at all banks, so the OP should be greatful they were left with £2K to stooze.

Well said that man!

MABLE

GingerFurball wrote: »

So you've run up a £5k overdraft, stopped funding your account and you're surprised the bank wants some of their funds back?

But I got the impression the OP had in the last few months been funded the account with thousands. I think he was doing a round robin and the NW got the bird about it.

Harryo

I realise that overdrafts are designed for short term periods and that banks have the right to call them in at any time. I was however only using the facility so that I could use the free overdraft offer to help fund investments. Just making maximum use of a free offer. I have been paying in reasonable sums really to that account (£4500 in Dec, £2000 in Jan and £15000 in Feb) but instead of leaving an ongoing average balance of just over £0 I have been leaving it at just under minus £5000. To me, the purpose of such a free offer is to make maximum use of it, otherwise what is the point of the free offer. I did have the option when I transferred the account to have interest paid to me for money in credit but decided the free overdraft was the best option for me. I am not really gripping over the matter for myself as I am in a fortuneate position to be able to pay off £5000 on demand. What concerns me is that others, who are not so fortunate, may see this offer as a bit of a life saver and expect it to be available for the year period of the offer, only to find they are given just a couple of weeks to pay back an overdraft, which they perhaps thought they would have for a year. The only option for some would be to take out an immediate loan or face unauthorised overdraft fees.

Nebulous2

Most people that are using it as their main bank account will get the year free. Something about your behaviour in running the account will have concerned them.

I've just opened a nationwide account, mainly for the interest rate and was only offered a 3 month free overdraft, so they may have tightened up anyway.