Opening a basic bank account with overdrawn current account

Don80

allybee101 wrote: »

I have my main current account with one bank and a couple of months ago I opened a TSB Classic account to help with budgeting for some separate costs. I didn't apply for an overdraft facility on the TSB account so I don't think a credit check was carried out.

TSB will credit check for a classic account. Even if you do not apply for an overdraft at the time you open the account, there is the possibility of one at a later date, as well as the possibility that the account could go overdrawn.

Chrysalis

Don80 wrote: »

TSB will credit check for a classic account. Even if you do not apply for an overdraft at the time you open the account, there is the possibility of one at a later date, as well as the possibility that the account could go overdrawn.

An account should never go overdrawn from transactions if the bank does the right thing and decline payments without sufficient funds, it would then only lead to it able to happen with banking fees.

When we had that court case several years ago I was absolutely bemused to find out banks were regularly clearing payments for account holders when the funds were not there. Even more so when it seemed was no consistency with it, some people got rejected payments "and" charged, others got the payments processed "and" charged, the latter clearly getting better value for money.

eskbanker

Chrysalis wrote: »

An account should never go overdrawn from transactions if the bank does the right thing and decline payments without sufficient funds, it would then only lead to it able to happen with banking fees.

When we had that court case several years ago I was absolutely bemused to find out banks were regularly clearing payments for account holders when the funds were not there. Even more so when it seemed was no consistency with it, some people got rejected payments "and" charged, others got the payments processed "and" charged, the latter clearly getting better value for money.

But many debit card transactions are processed offline, i.e. without the merchant referring to the bank for authorisation, and in such situations the bank is obliged to settle the transaction to the merchant even if it takes the account holder into overdraft, whether it's an authorised facility or not.

It's not a case of the bank 'doing the right thing' and declining such transactions, the bank isn't in the loop at all (in real time) so can't exercise that level of control (assuming that the card concerned isn't an online-only one and that the transactions are low enough value to be auto-authorised).

Sarastro

I think you're assuming that the bank will be in the slightest bit interested in making a deal with you - they would only consider that if they were pretty sure they were not going to get their money back at all.

You should pay the debt off. By all means complain about the interest and charges - you might get some of it refunded. But if you 'tell' the bank you're going to offer them a deal, they will simply say no.

Chrysalis

eskbanker wrote: »

But many debit card transactions are processed offline, i.e. without the merchant referring to the bank for authorisation, and in such situations the bank is obliged to settle the transaction to the merchant even if it takes the account holder into overdraft, whether it's an authorised facility or not.

It's not a case of the bank 'doing the right thing' and declining such transactions, the bank isn't in the loop at all (in real time) so can't exercise that level of control (assuming that the card concerned isn't an online-only one and that the transactions are low enough value to be auto-authorised).

Doesnt explain things.

Direct debits are offline? as some get DD refused if no funds, others approved, same bank and same merchant, I think there is decisions been made by banks to approve when they have a high confidence level in the customer.

If I use a cash machine, I have to wait for it to dial out to the bank, direct debits are not offline, standing orders are not offline, this is what I am talking about, not over the counter card payments.

So to clarify I basically mean automated monthly payments, standing orders and direct debits.

eskbanker

Chrysalis wrote: »

Doesnt explain things.

It explains why it was inaccurate for you to make the blanket assertion that "An account should never go overdrawn from transactions if the bank does the right thing and decline payments without sufficient funds", which is what I was replying to, but of course banks will be in a position to intervene in other scenarios such as DDs, etc, if you subsequently decide to change the point you're making!