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Guest comment: Time for radical reform on overdrafts

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Time for radical reform on overdrafts...
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'Time for radical reform on overdrafts'
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  • michaels
    michaels Posts: 29,085 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    If the banks can no longer make money on overdrafts they will stop offering them, or alternatively cherry pick the risks so only those who don't need one will get one - then people will be forced into taking loans - would that really be a win?

    (Also pet hate, unauthorised overdrafts, in France this is treated as stealing from the bank and I can see why, it is basically like seeing some money lying around that isn't yours and taking it to spend, or be it with the intention that it will be repaid at some point. However the banks are at least in part complicit as they allow it to happen).


    However charges for not making a payment should only reflect what it costs the bank (including a sensible profit - say an automated letter costs a fiver then 50p profit might be reasonable).
    I think....
  • sourcrates
    sourcrates Posts: 31,435 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    michaels wrote: »
    If the banks can no longer make money on overdrafts they will stop offering them,

    However charges for not making a payment should only reflect what it costs the bank (including a sensible profit - say an automated letter costs a fiver then 50p profit might be reasonable).

    I agree, and that might not be a bad thing, it may encourage people to live within there means, instead of within their overdraft.

    On the issue of charges, banks have been charging ridiculous amounts of money for the slightest error for years, it used to be £35 per item, per day, so if you went 10p over your limit for two days, they hit you with a £70 fine.

    Many people faced large debts due to bank charges, even now some banks charge way more than others, there should be a level playing field between all of them, with much reduced fee’s which won’t impact the ability of the account holder to afford them, at the moment affordability is not taken into account at all.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • michaels
    michaels Posts: 29,085 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    And of course less profitable banking = cost savings needed = branch closures
    I think....
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