Shocking new Alliance and Leicester Fees!

masonic

YorkshireBoy wrote: »

I assume that's a typo masonic, and you meant to say authorised.

Oops ....

masonic

MarkyMarkD wrote: »

I don't believe masonic is right that Martin has always recommended using the A&L account for one year only - at 6.9%, its authorised overdraft rate (prior to the recent policy change) was one of the cheapest available and was definitely a "best buy" for people regularly overdrawn.

Well, IIRC, it was the in-credit interest rate and linked Regular saver accounts etc that tended to have more weighting in Martin's recommendations, and those also expired after a year, making the account rather mediocre overall. But I digress...

jamesd

MarkyMarkD, the new system has a fixed amount of 50p per day up to 5 Pounds per month for however much of an overdraft is used up to 2500. If you can clear it within the first ten days doing that is best, else you should use the overdraft until the end of the charging period for the account so that the five Pounds buys you the money for as long as possible. Regardless of how long you have it you should try to have either no overdraft or the maximum overdraft less whatever safety margin you need to avoid exceeding the agreed limit. The overdraft money you borrow should be placed in their savings account until you transfer it back.

If you do need the overdraft for more than ten days and have 2500 as your limit with 100 overdraft needed, leaving 2400 to save, you can make 8 a month in interest to reduce the 5 fee if the interest rate on the savings account is 4% after tax. If it starts half way through the month the savings interest drops to 4 but that's still a useful reduction in the effective overdraft interest, from five Pounds to one.

montycat_2

I have just been charged £10.00 for being over my overdraft for 2 days .Umm I thought better than the £25.00 previously .
Yesterday they charged me 3 x £25.00 for authorising 3 direct debits .That is 1.2 of my weekly income .
Can anyone tell me if I am now going to be charged £25.00 for every direct debit "authorised "whilst over my overdraft or ,is it going to be £5.00 from now on .

I spoke to A and L and the Lady kept saying but you broke our terms and conditions .All I wanted to know was ,what was old charges and ,what were new charges .

Anyone clear this up for me please ?

Lavendyr

masonic wrote: »

You held your account for more than a year, though, didn't you.

Yes

MarkyMarkD wrote: »

The idea of deliberately maxing out your overdraft and saving the money, for the profit involved, is pretty silly unless you are a current account tart.

If you actually use the account properly, it's impossible to max out your overdraft without actually exceeding your limit which isn't a good idea.

But say you have a £3000 overdraft, and you transfer £2500 of it into a savings account only - you can still make a profit.

As you say though, it makes most sense simply to have a different current account for standard use. Personally I wouldn't bother doing it even if I had a big enough overdraft to make it worth it, too much hassle for not much gain, but it is a possibility which wasn't available under the older charges.

MarkyMarkD wrote: »

I don't believe masonic is right that Martin has always recommended using the A&L account for one year only - at 6.9%, its authorised overdraft rate (prior to the recent policy change) was one of the cheapest available and was definitely a "best buy" for people regularly overdrawn.

not only that, but it was also fairer on those who don't go overdrawn by very much. The system now charges a flat fee no matter how much you go overdrawn by, which is what I object to the most - I always thought a percentage of whatever you borrow is the fairest and most sensible way.

MarkyMarkD wrote: »

People who dip in and out of overdraft, and hence will get charged something between £0 and £60 a year, are also moaning without good cause IMHO.

I am quite prepared to pay for an overdraft, but I don't understand how it can be perceived as fair or sensibile to charge the same fee, whether you borrow £10 or £1000. Surely, if you borrow more, you are taking more money away from the bank, therefore should be paying more.

YorkshireBoy

montycat wrote: »

Can anyone tell me if I am now going to be charged £25.00 for every direct debit "authorised "whilst over my overdraft or ,is it going to be £5.00 from now on .

According to the T&C's, yes, you will...and you'll be charged this fee whether they make the payment or not. You'll also continue to incur a charge of £5 per day for each day you exceed your overdraft.

Furthermore, there doesn't appear to be a cap on the number of £25 payment review fees you can incur in a month.

If you know you're in trouble, and you can't fund the account from anywhere else (eg savings), consider cancelling upcoming DD's/SO's until you're at least well back in your agreed overdraft zone.

http://www.alliance-leicester.co.uk/currentaccounts/index.asp?page=all-rates&RateTable=premier-direct&ct=curraccrates#l8

MarkyMarkD

jamesd wrote: »

MarkyMarkD, the new system has a fixed amount of 50p per day up to 5 Pounds per month for however much of an overdraft is used up to 2500. If you can clear it within the first ten days doing that is best, else you should use the overdraft until the end of the charging period for the account so that the five Pounds buys you the money for as long as possible. Regardless of how long you have it you should try to have either no overdraft or the maximum overdraft less whatever safety margin you need to avoid exceeding the agreed limit. The overdraft money you borrow should be placed in their savings account until you transfer it back.

If you do need the overdraft for more than ten days and have 2500 as your limit with 100 overdraft needed, leaving 2400 to save, you can make 8 a month in interest to reduce the 5 fee if the interest rate on the savings account is 4% after tax. If it starts half way through the month the savings interest drops to 4 but that's still a useful reduction in the effective overdraft interest, from five Pounds to one.

I understand your points, and they are valid once you are committed to paying the £5 maximum. I don't get to that stage, so it doesn't make economic sense to max out the overdraft. I also appreciate the buffer that an authorised overdraft gives me, and that's thrown away (or substantially diluted) if you stooze with the overdraft balance.

You can't get a £2,500 overdraft limit unless you've achieved it by getting them to match another bank's overdraft, or you earn a very healthy amount. My limit is not £2,500.

And if you earn enough to have a £2,500 limit, you probably pay tax at 40% so the net interest rate on the savings isn't necessarily 4%.

MarkyMarkD

montycat wrote: »

I have just been charged £10.00 for being over my overdraft for 2 days .Umm I thought better than the £25.00 previously .
Yesterday they charged me 3 x £25.00 for authorising 3 direct debits .That is 1.2 of my weekly income .
Can anyone tell me if I am now going to be charged £25.00 for every direct debit "authorised "whilst over my overdraft or ,is it going to be £5.00 from now on .

I spoke to A and L and the Lady kept saying but you broke our terms and conditions .All I wanted to know was ,what was old charges and ,what were new charges .

Anyone clear this up for me please ?

The £5 a day charge is for being over your overdraft limit; the £25 fee is for transactions whilst over your overdraft limit. They are different things. So yes, it's going to be £25 from now on.

If you can borrow the cash from someone to get back within your authorised overdraft limit, it will save you a significant amount of money.

MarkyMarkD

Lavendyr wrote: »

I am quite prepared to pay for an overdraft, but I don't understand how it can be perceived as fair or sensibile to charge the same fee, whether you borrow £10 or £1000. Surely, if you borrow more, you are taking more money away from the bank, therefore should be paying more.

But then again, I thought it was fair that people who ran their account basically in order, but occasionally used their authorised overdraft, should pay next to nothing whilst the full costs of current account banking were borne by those who can't manage their finances.

Or maybe not.

The public can't have their cake and eat it.

We had a relatively happy period (for maybe 80% of banking customers) whilst those behaving as I've said above took a free ride at the cost of those who were often exceeding their limit.

And then the 20% kicked off, leading to a wholesale review of charging structures.

Given that someone has to pay for banking services, and the 20% are revolting, I can see why A&L (and others) have gone the way they have.

I don't like it, because it's not as cheap for me as it was before.

But I also appreciate that banking cannot be free (and shouldn't be free - any more than food is free at Tesco) and this way of charging for it is still better for me than most alternatives other than the one the revolting people don't like.

YorkshireBoy

MarkyMarkD wrote: »

The £5 a day charge is for being over your overdraft limit; the £25 fee is for transactions whilst over your overdraft limit. They are different things. So yes, it's going to be £25 from now on.

If you can borrow the cash from someone to get back within your authorised overdraft limit, it will save you a significant amount of money.

Do you have me on 'ignore' MMD? If not, is this a superfluous post?