Can an overdraft be removed without notice?

Sparkles87

My bank account had the overdraft removed without them giving me any notice. They then insisted on a SOA and then said I couldn't pay it back over the year based on my income so the account was being frozen and I had 24 hours to arrange a payment plan with them.

Is this allowed? I could have paid quite a lot of the overdraft back as I have money due to me next week, which I told them.

But they've now forced me onto a payment plan and said I can only withdraw any monies in by going to branch over the next 28 days.

Thrugelmir

Yes overdrafts are repayable on demand. Something must have triggered their actions. Such as the many in which you were conducting your account.

Sparkles87

There's been funds going in and out regularly and the overdraft was slowly being repaid.

Should they not have given me some time to sort something?

jonesMUFCforever

What about your credit files - anything going on there or payday loans?

DCFC79

What does your terms for your account say about overdrafts ?

Overdraft should only be a last resort and only a temporary solution.

Aquamania

Sparkles87 wrote: »

My bank account had the overdraft removed without them giving me any notice. They then insisted on a SOA and then said I couldn't pay it back over the year based on my income so the account was being frozen and I had 24 hours to arrange a payment plan with them.

Is this allowed? I could have paid quite a lot of the overdraft back as I have money due to me next week, which I told them.

But they've now forced me onto a payment plan and said I can only withdraw any monies in by going to branch over the next 28 days.

Refer to the terms of your overdraft agreement.

As already mentioned, overdraft agreements usually (always?) state they are repayable on demand.

Once you have paid the overdraft back, then you would normally have unhindered access to your money (unless advided otherwise).

If you are currently in debt to the bank through your overdraft, then the bank may not give you any money (especially if they have withdrwan your o/d facility) as you don't have any money deposited with the bank to withdraw.

Being asked to go into branch to withdraw money is a way of the bankl limiting you spending money you don't have, but does indicate they may be prepared to extend further lending to you ... but probably want to understand why you need the money and if it is really necessary. Expect questions if you attempt to withdraw money you don't have.

Aquamania

Sparkles87 wrote: »

There's been funds going in and out regularly and the overdraft was slowly being repaid.

Should they not have given me some time to sort something?

In response to the question you ask, I would refer you to the response already given.

In response to the disclosure you make, then this may indicate, at least in part, the reason the bank have taken the decision they have.

Overdrafts are intended as a recurring short term lending arrangement. Think of it, if you like, as a payday loan arrangement.
Whilst not always the case, overdraft limits are often set at or below the amount you regulary deposit into the account. That would mean you pay off the overdraft say each month, ... even if you then dip into it again later.

If you are not paying off the overdraft in full on such regular intervals, then you are treating the overdraft as a longer term loan which (a) is not what it is intended for and (b) is a very expensive way to borrow.

In these austire times, such methods of running your current account would probably get many a bank twitching, hence action taken by the bank to bring your finances under better control.

Dobbibill

Looking at your other post, it seems you are over-committed and are having difficulties. https://forums.moneysavingexpert.com/discussion/5317691

This would be a reason for the bank to suspect you are unable to pay back the borrowing. Speak to them about an arrangement to withdraw your funds and pay back the OD, even if it is small amounts.

Thrugelmir

Sparkles87 wrote: »

There's been funds going in and out regularly and the overdraft was slowly being repaid.

Should they not have given me some time to sort something?

Do you bank with HBOS?

Sparkles87

jonesMUFCforever wrote: »

What about your credit files - anything going on there or payday loans?

No payday loans. Lots of credit in use but hammering it all down well

Sparkles87

The overdraft was a previous student account, so was a large overdraft. Naively I'd been paying credit cards first and was due to start tackling the overdraft next but then lost my job.

The only funds they'll allow me to access is benefit payments which I think they have to legally.

The account was with co-op.