Lloyds bank overdraft limit reduced

YorkshireBoy

JimArnold wrote: »

3) I dont leave money in my current account just transfer it from a deposit account when needed In case of me making an error (I'm not perfect) and not having sufficient funds to cover a direct debit
How long do you think it would take to repair my credit history If a payment was refused ?

I run with a £100 float in my 'main' account, but I'm really on top of my finances.

Others may feel that the £15/yr cost (in terms of lost savings account interest) is a price worth paying for leaving a £1000 float in their current account?

On the overdraft, Halifax cut mine from £5K to £4K earlier this year and Yorkshire Bank removed a £4K facility altogether last year. Santander, however, have left my £10K facility in place for around 10 years. None are used.

Willing2Learn

Carrot007 wrote: »

...And no I have not had a letter and use mine a couple of times a year and it is £1000...

I also have a £1,000 overdraft that I never use. Are you suggesting that customers should use their OD occasionally (once or twice a year)?

Thrugelmir

JimArnold wrote: »

Has anyone else had a letter from Lloyds (not from their branch) reducing their overdraft limit because they don't use it ?

they hid behind the 'need to be a responsible lender' but in reality it seems like they aren't making enough money from my account

Provision of overdraft facilities indirectly costs the bank money in that they need to hold additional capital buffers.

JimArnold

Carrot007 wrote: »

Well ;-)


Most probably was.


Questions for you would be, how much is it? £1000 seem like a reasonable fall back, more not so much. How much do you use it? Never? Then of course they will remove it by computer, makes sense.


And no I have not had a letter and use mine a couple of times a year and it is £1000. You?

It was reduced from £950 to £200

Carrot007

JimArnold wrote: »

It was reduced from £950 to £200

At which point I woud think either you never use it and they consider it a waste of money providing it (they must offset capital to provide it). (Or maybe you only use under £200 if they have got more stringent), or you have something bad on your credit file (do check them all).


You could of course find a bank where you are charged for the credit provision you do not plan to use. Would be not suprised if charges of some sort become more common at some point soon.

born_again

JimArnold wrote: »

I asked if anyone else had received a similar letter - it looked computer generated

Strange but true fact.

Banks use computers to generate letters :T

They will have run a check on the millions of accounts to see who is not using their overdraft. Got nothing to do with you not making them any money.

Blame the regulators who are pressing the banks to cut down on irresponsible lending. Given o/d are one of the most expensive forms and should not be used as long term anyway (so hats off to you for not doing that :beer:) It is the easy one to cut down on.

eskbanker

Carrot007 wrote: »

You could of course find a bank where you are charged for the credit provision you do not plan to use. Would be not suprised if charges of some sort become more common at some point soon.

I would, given that the FCA has effectively just banned them from April 2020!

https://www.fca.org.uk/news/press-releases/fca-confirms-biggest-shake-up-overdraft-market:

Banning fixed fees for borrowing through an overdraft – calling an end to fixed daily or monthly charges, and fees for having an overdraft facility.

Ben8282

JimArnold wrote: »

Has anyone else had a letter from Lloyds (not from their branch) reducing their overdraft limit because they don't use it ?

Yes actually several years ago when Lloyds were having their financial problems.

Davy_Jones_II

JimArnold wrote: »

Has anyone else had a letter from Lloyds (not from their branch) reducing their overdraft limit because they don't use it ?

they hid behind the 'need to be a responsible lender' but in reality it seems like they aren't making enough money from my account

They aren’t hiding behind anything. They have a capital charge against undrawn credit, so your undrawn overdraft costs them money every day that you have it available. If you never use it then they may as we’ll withdraw it.

Carrot007

Willing2Learn wrote: »

I also have a £1,000 overdraft that I never use. Are you suggesting that customers should use their OD occasionally (once or twice a year)?

Yes I am if they expect it to remain.


Of course there are other factors to consider. However never use is expect it to lower seems reasonable.


You want a safety buffer? Get a decent credit card. (and use it at times and pay off in full each month).