Switching banks with an overdraft?

concrete_kid

I'm keen to switch my current account from HSBC to First Direct to take advantage of their £125 for new customers and £250 free overdraft.

However I have a £1000 overdraft with HSBC (would only be £625 once I'd used the £125 and £250 free overdraft). Would I be allowed to keep my old HSBC account open in order to pay off the overdraft or does the old account need to be closed in order to get the £125?

It would take me about 4-6 months to pay the HSBC overdraft back if I switched, however I would not have the funds to pay it off completely if they closed my account.

I also don't want anything negative on my credit file as I'll be buying a house in the new couple of years.

Any ideas?

Archi_Bald

You only get the £125 if you switch, and switching involves closure of the old account.

Your best bet could be to find another account to switch. Be aware though that FD can be very choosy, and they will be seeing your existing debt during the application process.

grumbler

MSE article: 7-day bank switching era begins: Full Q&A

MSE wrote:

Can I switch if I'm overdrawn?
Yes. What you'll need to do with your old overdraft will depend on whether your new bank or building society can provide facilities to help you pay off any overdraft, which will be subject to the new bank's normal lending criteria.
If your new bank can't help with your overdraft, you must make separate arrangements to repay your old bank or building society what you owe.
But there are no exact rules in place about switching when you're overdrawn, what happens will vary by provider.

concrete_kid

Thank you. I thought this might be the case.

YorkshireBoy

Switching to Nationwide FlexDirect might be a better option? £130 in incentives* and the possibility of a 0% overdraft for a year.

But whichever bank you switch to (using the CASS), be sure to ascertain what overdraft facilities are available to you BEFORE initiating the switch.


* £50 refer-a-friend and £80 Quidco.

Thrugelmir

concrete_kid wrote: »

I'm keen to switch my current account from HSBC to First Direct to take advantage of their £125 for new customers and £250 free overdraft.


I also don't want anything negative on my credit file as I'll be buying a house in the new couple of years.

Any ideas?

HSBC and First Direct are within the same banking group, i.e. HSBC.

If you wish to obtain a mortgage. Then clear the overdraft. Overdraft usage will be an issue.