Overdrafts for new current accounts

wadsworth101

A relative of mine  recently had a £2000 agreed overdraft facility on her 30 year old Barclays current account reduced to £1000 ( without using it much and always short-term monthly; with no changes to anything she's done over all the past years). She has appealed but to no avail. 
So she went to online application for a NatWest account ( where  already has a joint account with her spouse)----and the spouse also has main current account with a £10,000 overdraft. She said her NatWest solo application was accepted online but no overdraft was offered at all. So she was back where she started ie an unhappy Barclays customer who feels betrayed after 30 years of loyalty.
OK---we all know Banks are universally hated and ride roughshod over people who they regard as cattle rather than customers who are employing the Bank to carry out a service for them. 
But how can they offer someone a new current account without offering an overdraft facility that was the main reason for the application in the first place ?? 

kaMelo

Because the regulator has decided financial institutions were lending irresponsibly and demanded they tighten things up. Barclays in particular were fined millions by the regulator and had to pay many more millions out to customers over unaffordable lending in respect of credit cards. The result was to cut many people's credit limits hence the very long thread on here about "Barclays slashed my credit limit"  Other banks have been reducing/removing overdrafts too. I can only assume they are trying to get ahead of the curve ensuring any lending they do offer passes affordability tests first. They would much rather upset a customer (who in the majority of cases will moan but do nothing about it) than incur wrath of the regulator and ombudsman, 

With so many complaints around unaffordable lending it was inevitable things would change, the days of easy credit are over.

As the saying goes, be careful what you wish for.

dr_adidas01

wadsworth101 said:

A relative of mine  recently had a £2000 agreed overdraft facility on her 30 year old Barclays current account reduced to £1000 ( without using it much and always short-term monthly; with no changes to anything she's done over all the past years). She has appealed but to no avail. 
So she went to online application for a NatWest account ( where  already has a joint account with her spouse)----and the spouse also has main current account with a £10,000 overdraft. She said her NatWest solo application was accepted online but no overdraft was offered at all. So she was back where she started ie an unhappy Barclays customer who feels betrayed after 30 years of loyalty.
OK---we all know Banks are universally hated and ride roughshod over people who they regard as cattle rather than customers who are employing the Bank to carry out a service for them. 
But how can they offer someone a new current account without offering an overdraft facility that was the main reason for the application in the first place ?? 

An overdraft isn’t a right and plenty of customers have bank accounts without being able to have an overdraft!! 

Perhaps NatWest consider your relative to be a high risk hence the offer of no overdraft. They could also have a high debt to income ratio that you are not aware of. 

They could also simply have to much available credit which would bring affordability into action. Theres also the fact that credit lending has become more strict these days especially due to the pandemic. 

An overdraft can be withdrawn at a banks discretion and are payable on demand and they can reduce it should they wish as they also have to keep capital available to cover customers  possible debt due to regulatory requirements. 

If your relative only uses a small amount then quite rightly Barclays have decided that the 1k they have removed from the overdraft is better used elsewhere that will make them money. 

Your relative needs to suck it up as it’s nothing personal, they are simply making a commercial decision based on how they use their account. 

Daliah

An overdraft is one of the most expensive way of borrowing money. Your relative should be delighted that it is so difficult to get / maintain an overdraft arrangement.

eskbanker

wadsworth101 said:

OK---we all know Banks are universally hated and ride roughshod over people who they regard as cattle rather than customers who are employing the Bank to carry out a service for them. 
But how can they offer someone a new current account without offering an overdraft facility that was the main reason for the application in the first place ?? 

The cheek of it - a commercial business choosing not to lend a customer money, how very dare they!  Definitely fully deserving of the facile and generalised hyperbole, no question about it.... 🙄

Se1Lad

When I moved my banking from RBS to Barclays in 2014 they wouldn’t give me an overdraft to start with - even though I had a £5K one with RBS.  After 6 months they gave me £1K overdraft, eventually increasing to £15K a few years later.

I only ever use the £1k interest free portion on it though.