First Direct New Account - Mandatory Overdraft?

rtzk

I was looking for ways to put my savings into higher interest places so was going to setup a first direct account with the regular saver, however today I got a letter from them saying I had to sign some paper work, nothing usual until I read it and it said:

You the undersigned request that first direct ("the Bank") open a:-
Formal Overdraft Facility
1st Account

I guess theres nothing that unusual about this except I specifically said on the application when asked that I don't want an overdraft, the staff on the phone said that I wouldn't get one but I had to sign the paper work which as you see above literally says "open a Formal Overdraft Facility", which is fine and all but I don't want that and I don't want to sign a piece of paper which has no terms and conditions and the only word I have that this isn't whats happening is some guy on the phone which might be recorded.

Anyway I told them I would only sign the account form if I could strike the line that says "Formal Overdraft Facility" but the obviously weren't going to agree to that, thus making me feel even more like the only way to open a first direct account is with a mandatory overdraft.

What do others think, this seems really alien to me, I've never seen a bank do things this way. I don't want a second overdraft but they want to make me sign up for one, even if the value is £0, right now.

I feel like it's bad practice to ask if you want an overdraft - no, then say heres your over draft - no thanks, then on the phone say but it's not really an overdraft - but it is? Whats more there are no terms and conditions referenced or linked anywhere in the letter from HSBC, you have to have already read them, or sign the paper work at which point they will "be included in your Welcome Pack once your account is open" - at which point it's too late.

Thoughts?

EarthBoy

A £250 interest free overdraft is automatic with a 1st account, so if you don't want one they probably won't open an account for you.

YorkshireBoy

Keep a £50 float in the current account.
Forget to fund the (up to) £300 for the regular saver in time one month = no problem...they'll use the 0% overdraft facility and make your payment. Result = you won't lose out.

Thoughts?

Mountain...molehill.

Missus_Hyde

EarthBoy wrote: »

A £250 interest free overdraft is automatic with a 1st account, so if you don't want one they probably won't open an account for you.

I've opened accounts for myself and husband recently and do not have overdrafts for either of us on the accounts.

I opened them online and there was a separate section whereby I simply put "0" in the amount of overdraft requested and that was perfectly acceptable (I don't do overdrafts, particularly on accounts which are merely opened for the RS and switching bonuses.;) )

colsten

They'll still make you sign the T&Cs pertaining to overdrafts. For the simple reason that it is possible that people go into overdrafts, if only inadvertently.

[Deleted User]

How does it work then? You have zero overdraft and there's insufficient funds for:


a cash withdrawal - so the machine refuses to cough up the money


to clear a cheque - so the cheque bounces


to pay a dd/so - so the request is returned unpaid


etc, etc.


How do you accidentally end up 'going over' if the above protocol is applied by the bank?

Brewer20

I've accidentally gone over with my FD 1st account with no overdraft facility, you just get charged an overdraft fee. In my case I cleared the overdrawn state on the same day, no charge by them, it's in the T&C's.


To the OP take the £250 overdraft facility, it's very handy for those times you just may want use of it. If it's not a working account then fair enough, I have accounts with no overdraft facility, not really needed as such.

alanq

johnsmith1890 wrote: »

How does it work then? You have zero overdraft and there's insufficient funds for:


a cash withdrawal - so the machine refuses to cough up the money


to clear a cheque - so the cheque bounces


to pay a dd/so - so the request is returned unpaid


etc, etc.


How do you accidentally end up 'going over' if the above protocol is applied by the bank?

The debit card works offline so it is possible for in store payments to be made a few days before the bank is notified by which time it is too late to bounce the payment and an overdraft occurs.


I don't know about FD but some banks have explicitly in their Ts&Cs that it is at their discretion whether they bounce a cheque / DD or put an account into unarranged overdraft.

colsten

johnsmith1890 wrote: »

How do you accidentally end up 'going over' if the above protocol is applied by the bank?

The point is that the above protocol is not applied on the vast majority of current accounts. That's why literally all of them have T&Cs, and published charges, for arranged and for unarranged overdrafts.

If you want a current account that cannot get overdrawn, you need to either get a "control" account (offered by Natwest, IIRC) or hope that the bank would accept your application for a Basic account. The latter won't happen if you qualify for a 'normal' account, where you are given more leeway (e.g. with an offline debit card) and where you are expected to manage your spending without interference from the bank.

rtzk

I guess I don't really like the way they went about it.

Fingerbobs

EarthBoy wrote: »

A £250 interest free overdraft is automatic with a 1st account, so if you don't want one they probably won't open an account for you.

Is this a new thing? I opened my First Direct 1st Account in 2014, and it has never had any overdraft facility.