U switch to new account while still overdrawn?

Tanks13

Hi, currently bank with Halifax and have a £1200 overdraft which I end up being at the limit every month and making my finances difficult to work thus can't seem to chip away at it.

My plan was to open a account with first direct with no overdraft and use the 7 day switching service to move over all my direct debt, wages etc.

Plan would then make a regular payments each month into Halifax overdraft.

But can't find out anywhere if the switching service would automatically try close down my Halifax account? Any advice? :beer:

eskbanker

Yes, the 7-day Current Account Switching Service does close the old account, so if you want to switch an account that's overdrawn you need to ensure that the new account has enough of an overdraft to pay off the old one.

And it would be rash to start paying your wages into another account anyway as Halifax would probably then withdraw your overdraft facility and demand repayment in a hurry....

Tanks13

Thanks, makes perfect sense. Back to the drawing board

binaryuniverse

First question: does the overdraft cost you anything? If not, then your best option is to keep chipping away at it, as much as possible.

If it does then I would suggest switching to perhaps Nationwide, who give you a 12 month fee free overdraft (they may match the limit that Halifax give you, but that'll be subject to status, of course). That would then pay off the Halifax overdraft (and close the account), so you owe the money to Nationwide instead.

Dobbibill

A switch will close the old account.

A second account wouldn't be a bad thing for spending.

A suggestion to get out of the overdraft......treat like another bill.

Eg - use Halifax as a bills account - leave imoney in the account for all bills & charges for using OD & extra to chip away at the OD (this can be £10, £20 or £50 whatever your budget allows) - move everything else to a second account for spending throughout the month.

This would give you a plan to get out of the OD and keep Halifax happy as you are not deserting their account so they don't need to get jittery about the OD and call it in.

edinburgher

A more general observation, but FD are quite fussy when it comes to whose custom they accept. If you're struggling to get out of what isn't a huge overdraft, you might not be their ideal customer.

I say this not to be rude (it can take time to sort these things out), but to set your expectations that another bank might be a better bet vs. FD.

All the best whatever you decide.

Chapuys

Some banks will not close your old account using the switching service if you want it kept open. RBS asked me if I wanted to close another account or not during the switch process.

eskbanker

Chapuys wrote: »

Some banks will not close your old account using the switching service if you want it kept open.

....and hence my specific reference to the 7-day Current Account Switching Service in post #2. This service is the one typically required to be used to qualify for switching incentives such as the First Direct offer that OP was after, and definitely does close the old account.

Other, partial, arrangements may be available for certain switches but they normally won't qualify for the incentives so their usefulness is limited.

Edit: see https://www.currentaccountswitch.co.uk/helpandsupport/Pages/help.aspx:

Q. Do I have to close my old account?

A. Your old bank will close your old account as part of the switching process. This ensures that any payments made to your old account are automatically redirected to your new account.

If you want to, you can switch and keep the old account open, but you won’t be able to use the Current Account Switch Service.

Chapuys

eskbanker wrote: »

....and hence my specific reference to the 7-day Current Account Switching Service in post #2. This service is the one typically required to be used to qualify for switching incentives such as the First Direct offer that OP was after, and definitely does close the old account.

Other, partial, arrangements may be available for certain switches but they normally won't qualify for the incentives so their usefulness is limited.

Edit: see https://www.currentaccountswitch.co.uk/helpandsupport/Pages/help.aspx:

... and hence my point was you can switch without closing the previous account if the bank accepts it. The OP wants to switch his account without closing his older one. I didn't state you would get any rewards and RBS manage to do it in the 7 day period that the switching service does it in.

Switching to Royal Bank of Scotland
Moving your banking to us is simple and hassle free.
Want to close your bank account at your old bank?
7 Day Current Account Switch Service:
Transfer your regular payments (Direct Debits, Standing Orders and Bill Payments) from your old account
Transfer any credit balance from your old account
Close your old account
Want to keep your old account?
We'll still transfer your regular payments (Direct Debits, Standing Orders & Bill Payments) within 7 days
We are reliant on the Direct Debit Originators to update their records. If the Direct Debit Originator tries to claim before this has happened, your old bank will return it as unpaid
Credit will remain in your old account and any future credit will be paid to this account
Move some of your Direct Debits

If you want to move just one Direct Debit from another bank you need to contact the supplier who you pay the direct debit to and provide them with updated details to take the Direct Debit from your RBS bank account.

Westie983

FD do close the account if you use CASS, but yes other banks don't and the post was about FD so the information given is correct.

Westie983

Don80

Tanks13 wrote: »

Hi, currently bank with Halifax and have a £1200 overdraft which I end up being at the limit every month and making my finances difficult to work thus can't seem to chip away at it.

My plan was to open a account with first direct with no overdraft and use the 7 day switching service to move over all my direct debt, wages etc.

Plan would then make a regular payments each month into Halifax overdraft.

But can't find out anywhere if the switching service would automatically try close down my Halifax account? Any advice? :beer:

If you use the current account switch service, they will close the old account. You need enough money in the new account to pay the balance owed (including agreed overdraft with the new bank).

You could just open the new account and change your direct debits etc yourself - I have just opened a new account with Bank of Scotland and that's what I'm doing with an old RBS account.

If you are happy with Halifax, you could just ask them to reduce your overdraft by a set amount on your payday each month - some banks can do that automatically. If not, you could call and do that yourself. Do a budget and ensure its affordable - you don't want to slip into an unarranged overdraft. That would slowly reduce your overdraft.