A&L Current Account overdraft policy

Jim02

grumbler wrote:

And there are even more examples when people are eager to have full-scale account, but cannot get it because banks offer only basic accounts to them. Why banks do this instead of 'making a fortune'?

And are these people who have a good credit record? Who run their accounts well but occasionally slip into the red by a few pounds?

Or are they people who move in and out of the red on a regular basis, who have shown over time that they can't control their money? People who are real risks, in other words, rather than convenient scapegoats?

P.S. And I think most of us prefer to pay charges than to have accoount downgraded by a bank to a basic one. This is why nobody wants to downgrade voluntarily.

Of course they don't. And if they're not forcibly downgraded, the bank obviously doesn't really consider them to be a risk. And so the penalties levied on them are not justified.

grumbler

Jim02 wrote:

...occasionally slip into the red ...move in and out of the red on a regular basis ...People who are real risks, ...the bank obviously doesn't really consider them to be a risk. And so the penalties levied on them are not justified.

Yes, all this is about risks. All this discussion is not about charges in principle, but only about amount and limits when these charges are applied. Of course, banks could estimate risks and charges on individual basis, but this will be too complicated. Maybe one day they will start doing this. Now they have more simple system and split customers to two categories: high-risk with basic accounts and low-risk with full accounts. Within the latter group they give different overdraft limits to reflect differences in risk. I think, this is fair and this is enough. Agreed overdraft is your buffer that corresponds to your risk level as a customer. Just don't go into overdraft on purpose and you will be safe. All troubles happen when people get themselves on the razor-edge - I mean overdraft edge.

P.S. As I already wrote in the begining of this thread:

AGREED OVERDRAFT IS NOT YOUR MONEY! DON'T SPENT IT. THIS IS YOUR SAFETY CUSHION IN CASE SOMETHING UNEXPECTED HAPPENS.

Jim02

grumbler wrote:

Of course, banks could estimate risks and charges on individual basis, but this will be too complicated.

But isn't this exactly what the increased interest charges on overdrafts is for? To (more than) cover the loss when money is borrowed? Why not just have a further rate for 'unauthorised borrowing'? It would be much fairer because it would reflect the actual risk in terms of both amount and duration of infringement! Unlike at the moment where it doesn't matter if you go 20p or £200 over, you still pay the same penalty. You can't say the risk is the same in both cases!

And if banks can set individual overdraft limits, then they can just as easily set individual interest rates for unauthorised borrowing.

grumbler

Jim02 wrote:

And if banks can set individual overdraft limits, then they can just as easily set individual interest rates for unauthorised borrowing.

By doing this banks will admit that unauthorised borrowing is normal. However, any unauthorised borrowing is not normal! Even special financial instruments for borrowing, such as credit cards, penalise you for exceeding credit limit - and not only by higher interest rate.
*I think* any unauthorised borrowing is wrong and must be penalised in order to stop people using it. I think you will agree that high interest rate will not stop most of us. It is well known fact that most of people with credit card balances even don't know what interest rate they are paying.

davidcampbell

Grumbler, DC et al: It's not all black and white. If someone goes over their limit, it's not necessarily because they're irresponsible, or lazy, or reckless. And if the account is run responsibly, the risk to the bank when someone occasionally goes over their limit is negligible.

thats the point i was making. if its a one off occurence you will generally get some leeway if you have shown yourself previously to run your account within the terms.

yes sometimes mistakes happen and this is recognised.

And so the penalties levied on them are not justified.

To hit these customers with punitive penalties is morally (and legally) wrong, regardless of the Ts and Cs.

many people use this line of argument but ive not heard a convincing answer yet to the question

if you dont agree with the t&c's, why did you sign them?


DC

Jim02

grumbler wrote:

By doing this banks will admit that unauthorised borrowing is normal. However, any unauthorised borrowing is not normal! Even special financial instruments for borrowing, such as credit cards, penalise you for exceeding credit limit - and not only by higher interest rate.
*I think* any unauthorised borrowing is wrong and must be penalised in order to stop people using it. I think you will agree that high interest rate will not stop most of us. It is well known fact that most of people with credit card balances even don't know what interest rate they are paying.

Yes, that's a fair point. I agree completely, unauthorised borrowing is wrong, and I'm not attempting to condone it. And high interest rates certainly won't stop the people who are deliberately or recklessly abusing the system.

The truth is, there isn't an easy solution. Or rather, there is (the current one), but it's grossly unfair on what I believe are the majority of account holders.

Credit card penalties are also unfair (and equally unenforceable!)

davidcampbell wrote:

yes sometimes mistakes happen and this is recognised.

No it isn't. The first 'mistake' is recognised, after that the bank just goes into money-grabbing mode.

if you dont agree with the t&c's, why did you sign them?

DC

Because there is no option if you want a bank account. And it's impossible to live without a bank account these days. We've been round this argument before in another thread, I think!

At the end of the day, any contract clause that can be proved to be unreasonable is not enforceable in law, whether or not that contract has been signed. The question is: are these penalties unreasonable? I think they are, you think they aren't.

davidcampbell

guess we will just have to agree to disagree

DC

MagsyB

Hi All

Something that I have noticed with A&L recently is the online banking is not adding up.
I tend to check the account on line on a daily basis (sad I know!)
In the last week or so I have checked and seen that DD, SO and cheques go through and are showing that day but card payments arent - so the next day I check and have these payments listed as been put through the day before even though they weren't showing (if that makes sense)
I haven't found it a problem but I can see that it may catch people out and so they could get charged

The bottom line is - dont believe anything the on line statement tills you!

HTH

Magsy

davidcampbell

magsy, when you make a debit card (or credit card for that matter) the funds are no collected by the retailer immdiately. once the authorisation has been made then retailer will then take usually around 3 working days to physically take the funds from your account.

in that time though your avaialble balance will be adjusted to reflect your spending although the item wont be itemised on the statement until the retailer collects it.

my guess is that what you are seeing with A+L is the item is posted with the authorisation date displayed online but its not posted on the statment until its actually collected from the account

simple solution is to use a spreadsheet system where you track your transactions and dont 'tick them off' until they have actually debited - this way you will always ensure you leave enough money to cover any debits collected latethat you have forgotten about. i dont do this myself but someone who does could probably explain the mechanics of it better than me and how to set it up easily.

see http://forums.moneysavingexpert.com/showthread.html?t=38523 which has some discussion on 'reserved' payments on debit cards.

hth
DC

MagsyB

Thanks David
I am not as high tech as you and so I use a note book which I write down exactly what was spent on debit card and have a running total so I've never been unlucky enough to be caught out by them.

Its just that I have noticed a change in the way that they are posting the items using the online banking - the current balance is usually the one of the day before and the available balance includes everything ear marked - which could be deceiving.

Also just as a warning to others they have now started putting through deit card payments on a Saturday which never happened before.

I am not a fan of A&L but we are stuck with them (and them with us!!) at the moment but I am now sure not giving them the charges if I can avoid it it anyway!!!

Just my observations which might help and its good to see that I'm not the only one who is writing (or typing) everything down!!