Are the Banks about to get tough(er) on overdrafts?

rog2

As the 'Credit Squeeze' bites even harder, and particularily in line with the High Court ruling on 'Bank Charges', there are many rumours flying around as to how Banks are going to 'crack down' on credit.
I have heard, from a usually very reliable source, just how one Bank - Halifax HBOS intends to 'tackle' the problem of those customers who 'live off of their overdraft'.
Firstly, as I understand it, they will be writing to all of their 'overdrawn' customers, demanding that the customer makes an arrangement to repay their overdraft. If no such arrangement is made, then the account will be 'frozen' and the customer will have to go into the branch, before any funds are made available to them.
Alternatively, the account may be put on a 'deduction cycle' whereby a percentage of the overdraft is forcibly removed, on reciept of funds, salary or benefits, until the overdraft is cleared.
Why should that worry us - after all, it could be argued, the Bank is only taking back what was theirs in the first place.
Not altogether true, though, and potentially it could impact on many of the people, on DFW, who are dealing with their debts, and for whom, the 'overdraft facility' is an essential part of their budgetting strategy.
Why, then, should the Bank (and I stress that this is as yet an unconirmed rumour relating specifically to HALIFAX HBOS) be able to not only give themselves 'preferential status' over a debtor's other creditors, but also to put at risk that debtor's dealings with his/her other creditors?
Once again, I must stress that whilst from a reliable source this is unconfirmed at the moment, and if a Senior Executive of HALIFAX HBOS were to come on this forum and categorically state that this is untrue, then I will apologise unreservedly and delete this thread.
In the meantime, I would advise any poster who is currently reliant on their Halifax HBOS overdraft, to consider their position. They may well be advised to look at opening a basic account, at a non-related Bank, and have their wages/benefits paid into that account and to treat their Halifax HBOS overdrafts as 'debt' and make an offer of monthly payments, towards that 'debt', that they can afford.
I welcome your comments.

Billy_two_speakers

rog2 wrote: »

As the 'Credit Squeeze' bites even harder, and particularily in line with the High Court ruling on 'Bank Charges', there are many rumours flying around as to how Banks are going to 'crack down' on credit.
I have heard, from a usually very reliable source, just how one Bank - Halifax HBOS intends to 'tackle' the problem of those customers who 'live off of their overdraft'.
Firstly, as I understand it, they will be writing to all of their 'overdrawn' customers, demanding that the customer makes an arrangement to repay their overdraft. If no such arrangement is made, then the account will be 'frozen' and the customer will have to go into the branch, before any funds are made available to them.
Alternatively, the account may be put on a 'deduction cycle' whereby a percentage of the overdraft is forcibly removed, on reciept of funds, salary or benefits, until the overdraft is cleared.
Why should that worry us - after all, it could be argued, the Bank is only taking back what was theirs in the first place.
Not altogether true, though, and potentially it could impact on many of the people, on DFW, who are dealing with their debts, and for whom, the 'overdraft facility' is an essential part of their budgetting strategy.
Why, then, should the Bank (and I stress that this is as yet an unconirmed rumour relating specifically to HALIFAX HBOS) be able to not only give themselves 'preferential status' over a debtor's other creditors, but also to put at risk that debtor's dealings with his/her other creditors?
Once again, I must stress that whilst from a reliable source this is unconfirmed at the moment, and if a Senior Executive of HALIFAX HBOS were to come on this forum and categorically state that this is untrue, then I will apologise unreservedly and delete this thread.
In the meantime, I would advise any poster who is currently reliant on their Halifax HBOS overdraft, to consider their position. They may well be advised to look at opening a basic account, at a non-related Bank, and have their wages/benefits paid into that account and to treat their Halifax HBOS overdrafts as 'debt' and make an offer of monthly payments, towards that 'debt', that they can afford.
I welcome your comments.

my wife had a letter a coupe of weeks ago asking her to call a number for an "overdraft review" they said it was too high (they gave it her and she never went over it) they said they would like to cut it over the next 7 months to half the amount and would she do that ?
which she is doing

Billy_two_speakers

rog2 wrote: »

As the 'Credit Squeeze' bites even harder, and particularily in line with the High Court ruling on 'Bank Charges', there are many rumours flying around as to how Banks are going to 'crack down' on credit.
I have heard, from a usually very reliable source, just how one Bank - Halifax HBOS intends to 'tackle' the problem of those customers who 'live off of their overdraft'.
Firstly, as I understand it, they will be writing to all of their 'overdrawn' customers, demanding that the customer makes an arrangement to repay their overdraft. If no such arrangement is made, then the account will be 'frozen' and the customer will have to go into the branch, before any funds are made available to them.
Alternatively, the account may be put on a 'deduction cycle' whereby a percentage of the overdraft is forcibly removed, on reciept of funds, salary or benefits, until the overdraft is cleared.
Why should that worry us - after all, it could be argued, the Bank is only taking back what was theirs in the first place.
Not altogether true, though, and potentially it could impact on many of the people, on DFW, who are dealing with their debts, and for whom, the 'overdraft facility' is an essential part of their budgetting strategy.
Why, then, should the Bank (and I stress that this is as yet an unconirmed rumour relating specifically to HALIFAX HBOS) be able to not only give themselves 'preferential status' over a debtor's other creditors, but also to put at risk that debtor's dealings with his/her other creditors?
Once again, I must stress that whilst from a reliable source this is unconfirmed at the moment, and if a Senior Executive of HALIFAX HBOS were to come on this forum and categorically state that this is untrue, then I will apologise unreservedly and delete this thread.
In the meantime, I would advise any poster who is currently reliant on their Halifax HBOS overdraft, to consider their position. They may well be advised to look at opening a basic account, at a non-related Bank, and have their wages/benefits paid into that account and to treat their Halifax HBOS overdrafts as 'debt' and make an offer of monthly payments, towards that 'debt', that they can afford.
I welcome your comments.

my wife had a letter a coupe of weeks ago asking her to call a number for an "overdraft review" they said it was too high (they gave it her and she never went over it) they said they would like to cut it over the next 7 months to half the amount and would she do that ?
which she is doing she has plenty going in and only uses the amount near max now and then

Broken_hearted

I had problems getting the banks to shut mine Barclays were full of horror stories of how everyone needed an O/D and we would be hit with charges all the time for going over.

jak

I think if you budget to the bone as most of us do on DFW then this enforced debt repayment is a nightmare! If you rely on the o/d to keep you going as you repay debts etc. then you should be able to keep using it! That said, I feel like my o/d is part of my own money now i've used it for so long and that can't be a good thing can it?
I think they should let us have them for as long as we need!

rog2

jak wrote: »

I think if you budget to the bone as most of us do on DFW then this enforced debt repayment is a nightmare! If you rely on the o/d to keep you going as you repay debts etc. then you should be able to keep using it!

EXACTLY my point, jak - it is 'ENFORCED DEBT REPAYMENT', made all the worse by the fact that it is, usually, the Banks that offer this facility in the first place, and make a 'handsome' profit out of it, too.

Bismarck

Gut feeling is that they will be tighter than before but be happy to see some people stay in an overdraft situation if they are gaining a nice reliable low-risk pile of interest..I've a large OD facility that I don't use but I 'd be surprised if the bank didn't want me to use it if they can get 9% interest off me....

That said, thanks for the warning....I've always disliked the repayable on demand aspect of overdrafts and would encourage anyone to have a separate last resort account/source of credit that they could take emergency funds from if the bank pulled the rug quickly.

Krasnoludek

Interesting post !

We had our salary paid into our Halifax account where we had a 2.5k overdraft we were always up to the limit with :mad:

We are on a DMP with CCCS now and have counted our OD as part of it and written to Halifax, we have also switched bank accounts. Looks like we did it just in time, although they have just added charges making us over our limit, no doubt we will be getting another letter saying we are being charged for being over our overdraft limit more because of their charges :rotfl: oh well, reclaiming here we come. Cant say I am suprised, although we were being charged 30 quid a month in interest so they can stick their OD frankly!

K x

rog2

Bismarck wrote: »

Gut feeling is that they will be tighter than before but be happy to see some people stay in an overdraft situation if they are gaining a nice reliable low-risk pile of interest..I've a large OD facility that I don't use but I 'd be surprised if the bank didn't want me to use it if they can get 9% interest off me....

That said, thanks for the warning....I've always disliked the repayable on demand aspect of overdrafts and would encourage anyone to have a separate last resort account/source of credit that they could take emergency funds from if the bank pulled the rug quickly.

I think that it is aimed more at those, like Krasnoludek, who had become dependant upon their 'overdraft facility', although the way that the Banks seem to 'tempt' people into using their overdraft facility is also a worry to me.

Bismarck

The banks do seem to have tried to blur the line between overdraft and loan, almost to the point where the customer feels able to treat it as a flexible loan with an indefinite repayment term..

shopaholic2008

Thanks for this thread it will be interesting to see what others are saying. I have been considering this recently and have decided to start paying off my overdraft rather than leave it till later in the year.

My OH had an overdraft with Halifax and they demanded £2000 back from him. He was lucky enough (in some ways) to be able to include it in a DMP this was about a year ago though.