Removing the facility for an unwarranted overdraft

luiza8

I do not want the ability to go into an unwarranted overdraft. I've removed the overdraft facility on my account.

I called up Nationwide today to ask them to remove the facility of an unwarranted overdraft and they said this was not possible, however I've don'e it with another bank before.

Shouldn't' bank's have some kind of financial responsibility to help customers manage their money? If I don't want an unwarranted overdraft they must surely stop the possibility of an unwarranted overdraft?

What are your opinions?

System

Nobody wants an unwarranted overdraft! Perhaps you meant unarranged overdraft?

eskbanker

luiza8 wrote: »

I do not want the ability to go into an unwarranted overdraft. I've removed the overdraft facility on my account.

I called up Nationwide today to ask them to remove the facility of an unwarranted overdraft and they said this was not possible, however I've don'e it with another bank before.

Shouldn't' bank's have some kind of financial responsibility to help customers manage their money? If I don't want an unwarranted overdraft they must surely stop the possibility of an unwarranted overdraft?

What are your opinions?

My understanding is that this is primarily to do with debit cards, where the normal arrangement is for customers to have offline cards, which don't always seek online authorisation for transactions below the retailer's floor limit, and therefore the bank doesn't find out about the transactions until hours/days/weeks later and so can't decline them in real time, so is unable to prevent an account going overdrawn.

Some banks will supply online-only cards, which can't be used where real-time authorisation isn't possible (e.g. trains, automated petrol pumps, etc) but these are naturally unpopular with customers.

In conjunction with such cards, some banks will offer a (chargeable) 'control option', which essentially prevents an account from going overdrawn, and basic bank accounts also work this way but are typically only offered to those deemed as relatively risky in credit terms....

colsten

Natwest offer a free-of-charge add-on option which doesn't allow overdrafts. It comes with limitations that you'd expect - bills will not get paid if they would send you overdrawn, and you only get an online debit card. https://supportcentre.natwest.com/Searchable/913232752/What-is-Overdraft-Control.htm

I seem to remember Lloyds have a similar offering but I can't remember now what they call it. Someone else no doubt will know.

masonic

The best way to avoid having an unarranged overdraft is to arrange an overdraft and never use it. This is normally free if you can maintain a credit balance, and cheaper than being charged an unpaid item fee plus incurring late payment charges for failed direct debits etc. Plus you have the benefit of a full debit card, which cannot be offered without some sort of overdraft for the reason mentioned above.

Failing that, look into getting a basic bank account. This will normally eliminate the possibility of being able to overspend on a debit card, but direct debits could still fail and be subject to an unpaid item fee.

If you really want to make sure you can never spend more money than is in your account and don't want any possibility of incurring bank charges, then open a savings account with cashcard. You won't be able to set up direct debits or pay for things by card, but you may be able to receive payments and can withdraw cash for your spending.

masonic

colsten wrote: »

Natwest offer a free-of-charge add-on option which doesn't allow overdrafts. It comes with limitations that you'd expect - bills will not get paid if they would send you overdrawn, and you only get an online debit card. https://supportcentre.natwest.com/Searchable/913232752/What-is-Overdraft-Control.htm

Seems an interesting option, digging into the details...

"Payments that Overdraft Control can’t stop
Although Overdraft Control makes unarranged overdrafts less likely, it can’t
stop them altogether. And there are some transactions we’ll continue to pay, such as: Payments using your debit card – where the retailer does not check with us that you have enough money in your account before accepting the payment..."

"Please think about these points before registering
If you have Overdraft Control, we will reject payments even if they were to
create an unarranged overdraft on your account of only £0.01. Important
payments like your mortgage, rent or utility bills might not get paid. This could lead to your service being disrupted or the service provider applying fees for non payment
We may cancel any standing order or Direct Debit on your account, if it isrejected more than once by Overdraft Control and we think you’re unlikely to be able to pay it in future"

Still, perhaps some think it's a fair trade-off to avoid the fees :shrug:

EarthBoy

colsten wrote: »

I seem to remember Lloyds have a similar offering but I can't remember now what they call it. Someone else no doubt will know.

Lloyds called it "control". You added control to your account, and paid £10 per month for the privilege.

I think Lloyds have withdrawn "control" now as it's no longer mentioned on their website. Instead, they no longer charge for unarranged overdrafts. On the other hand, they're less likely to allow unarranged overdrafts, i.e. they're more likely to reject payments which would take you into an unarranged overdraft.

https://www.moneysavingexpert.com/news/2017/11/halifax-and-lloyds-overdraft-changes---the-winners-and-losers/

PRAISETHESUN

Any basic account will offer this, but there are limitations on "offline" debit transactions (eg. petrol pumps, etc) that have been mentioned above.

Nationwide usually won't let you open a basic account if you hold a proper current account with them, but it might be worth a try talking to them again to see if you can switch to one.