About HSBC arrangement fee

sysboy

I have a HSBC current bank account with 200 overdraft limit,but I never use their overdraft service and will never ask for a update. Recently I was told that HSBC may charge for a fee named arrangement fee, but I am not sure. Do you have any experience with this? How to avoid this charge? Should I cancel this overdraft service as I will never use it? Any advice would be greatly appreciated. Thanks.

ShelfStacker_3

If you never use the overdraft, ask for it to be removed, and you'll escape the fee.

Basically, HSBC review your overdraft each year now, and if they decide you can keep it they charge you £25. It's partly to claw back some of the bank charge reclaim cash, partly so they can put unused overdrafts like yours to better use elsewhere.

(I never use mine FWIW, but I prefer to keep my limit just in case something goes wrong.)

sysboy

ShelfStacker wrote: »

If you never use the overdraft, ask for it to be removed, and you'll escape the fee.

Basically, HSBC review your overdraft each year now, and if they decide you can keep it they charge you £25. It's partly to claw back some of the bank charge reclaim cash, partly so they can put unused overdrafts like yours to better use elsewhere.

(I never use mine FWIW, but I prefer to keep my limit just in case something goes wrong.)

Thanks for your reply.
Have you ever been charged about this arrangement fee? I dont know when they may charge me 25.

By the way, if I use it in some cases, will they charge for this service, such as interest fee or others?

ShelfStacker_3

They charged me to set up the O/D I have (happy to pay it, it'll look good on my credit file). It's the same charge. If you call up and ask they'll probably be able to tell you when yours is up for review; chances are it's the same day of the same month that you originally got your O/D on.

There's still interest paid on using the facility, but no other fees besides that and, obviously, the arrangement fee.

gt94sss2

ShelfStacker wrote: »

Basically, HSBC review your overdraft each year now, and if they decide you can keep it they charge you £25.

HSBC don't (yet?) seem to be charging everyone this fee - for instance if I click on 'Amend overdraft' under 'Apply for Products' in online banking, it states:

Expiry Date: 31/12/9999

Note: I just have a normal HSBC current account - not a Premier or Student one which is exempt from these arrangement fees..

I suspect whether you get hit for the £25 charge depends on your banking history with them (for existing customers)

Regards
Sunil

PBA

ShelfStacker wrote: »

Basically, HSBC review your overdraft each year now, and if they decide you can keep it they charge you £25.

No, that's not right, you've got to read their terms more closely. If you ask them to increase your overdraft more than once each year then they charge you 25. If you just stay within your agreed OD limit and don't go above it then you won't be charged.

ShelfStacker_3

PBA wrote: »

No, that's not right, you've got to read their terms more closely. If you ask them to increase your overdraft more than once each year then they charge you 25. If you just stay within your agreed OD limit and don't go above it then you won't be charged.

So all the threads of people who are getting letters explaining their 20-year long overdraft is being charged an arrangement fee don't exist? Or indeed, the passage in the T&Cs which says "We may agree to provide you with another overdraft at the end of the term of your facility and, if we do so, an Arrangement Fee may be payable."?

quinlanmd

The confusion regarding the arrangement fee may be because the way HSBC define "overdraft" may differ from how customers define "overdraft".

As I understand it, formal overdrafts approved not more than once every 6 months are not charged an arrangement fee (i.e. where a customer requests a revised/new overdraft or renewal of an existing overdraft that is due to expire).

However, informal overdrafts are treated in the same way for charging purposes. So if, say, HSBC pay or bounce a debit that exceeds/would have exceeded your agreed overdraft limit, this counts for charging purposes and any request in the following 6 months - formal or informal - for a revised or renewed overdraft facility becomes chargeable.

To answer the OP's question, if there is ANY chance that you might accidentally go overdrawn, an "informal overdraft" in HSBC terminology, (e.g. writing out a cheque and forgetting to pay in funds to cover it until after it has been presented) then best advice is probably to keep your formal £200 overdraft in place (this is a personal opinion, though).