Natwest reducing my overdraft?

onlyfoolsandparking

As the title says have just received a letter from them saying they are reducing my overdraft limit from £5000 to £2500 end of November. I haven't used it for quite a few years and when I did use it I was in between careers and it was handy. There is an option to keep the 5K limit if I wish to, my question is, should I keep the limit OR just take the reduction? I don't envisage using it for the foreseeable not even by a few quid as all my outgoings are covered in the month with more or less a month spare in the account and I have other accounts with money for emergencies. I'm not interested in impact on fictional score (if indeed there is one?) just looking for opinions.   

jonesMUFCforever

If you are not using it then £2500 is still a sizeable amount - just in case.
Don't take this reduction personally - all banks are doing it as it costs them to have enough liquidity to cover all its potential overdrawn balances.

Jami74

I got the same letter, overdraft being reduced unless I do something to keep it. I'm very proud of the fact I haven't used it in a couple of years.

Edi81

As others have said reducing overdraft and credit card limits is a way for them to reduce risk and hold less liquidity (which is going to cost even more once base rate reduces). If you haven't used it for some time and don't expect to need it then just accept it for what it is.

born_again

Make of this what you will.

An overdraft of £2,500 for 30 days would cost a total of

£69.35 in interest

The interest rate for arranged and unarranged overdrafts is 39.49% EAR

But if you had the minimum limit they will let you have £250. The same amount of debt over the same time becomes.

An overdraft of £2,500 for 30 days would cost a total of

£24.19 in interest

The interest rate for arranged and unarranged overdrafts is 39.49% EAR

You may incur unpaid transaction fee's for DD's & other declined payment, but would still not pay more than the above amount.

onlyfoolsandparking

born_again said:

Make of this what you will.

An overdraft of £2,500 for 30 days would cost a total of

£69.35 in interest

The interest rate for arranged and unarranged overdrafts is 39.49% EAR

But if you had the minimum limit they will let you have £250. The same amount of debt over the same time becomes.

An overdraft of £2,500 for 30 days would cost a total of

£24.19 in interest

The interest rate for arranged and unarranged overdrafts is 39.49% EAR

You may incur unpaid transaction fee's for DD's & other declined payment, but would still not pay more than the above amount.

Those figures certainly look better but (and correct me if I'm missing something) having a missed DD could cause me more of an issue with having defaults potentially added on my file and would make me look like I cannot service my mortgage etc. 

Thrugelmir

Isn't £2,500 sufficient for short term borrowing requirements? 

onlyfoolsandparking

Thrugelmir said:

Isn't £2,500 sufficient for short term borrowing requirements? 

probably but I'm not asking that! 

Yahoo_Mail

born_again said:

Make of this what you will.

An overdraft of £2,500 for 30 days would cost a total of

£69.35 in interest

The interest rate for arranged and unarranged overdrafts is 39.49% EAR

But if you had the minimum limit they will let you have £250. The same amount of debt over the same time becomes.

An overdraft of £2,500 for 30 days would cost a total of

£24.19 in interest

The interest rate for arranged and unarranged overdrafts is 39.49% EAR

You may incur unpaid transaction fee's for DD's & other declined payment, but would still not pay more than the above amount.

It's true, but good luck racking up £2250 in an unauthorised overdraft.

jackjones01

Overdrafts are repayable on demand so be grateful they aren’t pulling the plug on it all together. 

[Deleted User]

onlyfoolsandparking said:

As the title says have just received a letter from them saying they are reducing my overdraft limit from £5000 to £2500 end of November. I haven't used it for quite a few years and when I did use it I was in between careers and it was handy. There is an option to keep the 5K limit if I wish to, my question is, should I keep the limit OR just take the reduction? I don't envisage using it for the foreseeable not even by a few quid as all my outgoings are covered in the month with more or less a month spare in the account and I have other accounts with money for emergencies. I'm not interested in impact on fictional score (if indeed there is one?) just looking for opinions.   

So you have to option of retaining £5k limit? What is the cost of doing that?