overdraft cut

beanc

After banking with Lloyd's in its various incarnations for 40 years my arranged overdraft has been cut unilaterally by 66%. The bank confirms my account had been managed properly and the reason for the cut was that I had not used the overdraft facility.

Despite 2 requests at branch level they could not reverse the action as an automatic letter had been sent.

I am therefore switching to another bank.😣

bigadaj

beanc wrote: »

After banking with Lloyd's in its various incarnations for 40 years my arranged overdraft has been cut unilaterally by 66%. The bank confirms my account had been managed properly and the reason for the cut was that I had not used the overdraft facility.

Despite 2 requests at branch level they could not reverse the action as an automatic letter had been sent.

I am therefore switching to another bank.😣

Why are you so upset if you're not using it?

Ben8282

I have banked with Lloyds for almost as long as you and have had an arranged overdraft for decades. It was reduced once (by around 16%) a few years back, when Lloyds were having their own financial problems. The reason given to me was the same as given to you plus some comment about them having to insure their overdrafts and the underwriters imposing stricter controls.
I understand that what has happened can be frustrating. Ideally, an arranged overdraft should never be used but exist simply as an emergency reserve and it's existence on your credit files can give an added reassurance to lenders.
However, before you close this account, which is presumably being reported on your credit files with an account age of 40+ years, and replace it with a new account consider the following.
How does the new overdraft limit compare with the average monthly current account turnover?
Is this account your main current account which receives your income?
Do you believe that you will be able to get a higher overdraft facility elsewhere?
Have you selected a new account which meets your needs?
Remember, THE GRASS IS NOT ALWAYS GREENER.

Jo_Blogs

bigadaj wrote: »

Why are you so upset if you're not using it?

I was wondering that too! :huh:

PeacefulWaters

What a strange response to a decision that doesn't affect the way you manage your money.

System

Banks aren't your friend, they want to make money from you.

I suggest you move elsewhere but keep the Lloyds account open to suit you

Shakin_Steve

We have a pre-arranged £5000 overdraft with Barclays, and then another £500 emergency borrowing ( imagine using the five grand and it not being enough, so you had to use another £500 :eek:). We've never, ever dipped into it, far cheaper ways to borrow money. If they reduced it to, say, £1000, it would not bother me at all.
I suppose I might wonder why, but it certainly wouldn't make me want to move.

Westie983

Overdrafts are repayable on demand and can be removed at any point, I would suggest as you were not using it, they removed it, but wait for the letter to arrive and see what it says, they may reinstate it if there is a need, like a high bill due out.

That said if you haven't used it, you shouldn't miss it all that much.

Thrugelmir

Shakin_Steve wrote: »

I suppose I might wonder why, but it certainly wouldn't make me want to move.

Banks are required to tie up capital for overdraft facilities even if unused. So there's a cost to the bank. With operating margins under pressure. There'll be a systematic root and branch review in progress by a dedicated team.

MABLE

beanc wrote: »

After banking with Lloyd's in its various incarnations for 40 years my arranged overdraft has been cut unilaterally by 66%. The bank confirms my account had been managed properly and the reason for the cut was that I had not used the overdraft facility.

Despite 2 requests at branch level they could not reverse the action as an automatic letter had been sent.

I am therefore switching to another bank.��

I had this happen to me a few years ago when my facility was £10k. They wanted to reduced to £5k because of non use. I started using it and went about £300 overdrawn. A little while later they sent me another letter and said based on the fact I was now using the facility they would leave at the original amount.

I do use the overdraft more now but ensure the overdraft is paid back the same day.

That way I pay no charges and they can see it is being utilised.

takman

MABLE wrote: »

I had this happen to me a few years ago when my facility was £10k. They wanted to reduced to £5k because of non use. I started using it and went about £300 overdrawn. A little while later they sent me another letter and said based on the fact I was now using the facility they would leave at the original amount.

I do use the overdraft more now but ensure the overdraft is paid back the same day.

That way I pay no charges and they can see it is being utilised.

Why would you want such a large overdraft that you never use?. Overdrafts are very poor ways of borrowing and the only reason someone would need to use an overdraft is due to poor financial managment.


By having such a large overdraft and using it you are reducing the chance of you getting useful credit such as Cashback Credit Cards.