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

Lemon_Tree

I've been trying to manage my O/d down for a while, i only manage £50 off every few months but i keep trying, my biggest worry is for the bank to withdraw it as i would really be stuffed it would really mess up my plans to get debt free.
i also seriously suspect their motives if they do this en mass, i'm sure they're hoping a lot of people will go over their new enforced limits and they can pile lots of charges back on them.

rog2

Lemon_Tree wrote: »

I've been trying to manage my O/d down for a while, i only manage £50 off every few months but i keep trying, my biggest worry is for the bank to withdraw it as i would really be stuffed it would really mess up my plans to get debt free.
i also seriously suspect their motives if they do this en mass, i'm sure they're hoping a lot of people will go over their new enforced limits and they can pile lots of charges back on them.

You, and others in the same situation, should seriously be looking at opening a new account, at a non-related Bank, start getting your salary paid into the new account, which you should try and keep in credit, then start treating your existing overdraft as another 'debt', to be paid off at a rate that YOU can afford, rather than what the Bank decides that you can pay.

Buffythedebtslayer

*goes to double check accounts aren't over drawn.*

it frightens me to be honest. I worry about my sister, me, my friends. The banks seem to have so much control. I always used to find economics interesting but now so much of what happens to on the news applies to me I do sometimes stick my fingers in my ears and sing la la la.

sorry not helpful.

xx

sunnyteacake

Hi, this is very interesting. Although i do not bank with Halifax, in January I had a call from Natwest who wanted to review my overdraft. At that time it was only 500 quid but I was always in it. They wanted me to reduce it by half, which i agreed to. However, i prioritised this and cleared the whole overdraft within 2 months and then closed the account down. I currently bank with another bank with no overdraft facility (having also paid this one off last month). They wanted me to reconsider cancelling my overdraft as they told me that they would charge me for going overdrawn but i decided to stick to my guns and have no overdraft. This works best for me as i know the temptation to use an overdraft is too much for me. I cant have what i cant afford.

Bismarck

Buffythedebtslayer wrote: »

*goes to double check accounts aren't over drawn.*

it frightens me to be honest. I worry about my sister, me, my friends. The banks seem to have so much control. I always used to find economics interesting but now so much of what happens to on the news applies to me I do sometimes stick my fingers in my ears and sing la la la.

sorry not helpful.

xx

this isn't economics, i'm afraid....there's no science to it from our point of view...it's all about guesswork and confidence and greed. There isn't much that's predictable apart from the fact that the banks hold most of the cards in this game..and they make the rules up as they go along. :mad:

SamanthaA

To be honest, have read all of the thread & not understood some of the more technical jargon -Keynesian liquidity trap, BoJ & ECB ?

But the jist is what I have been expecting for some months
That banks cannot afford to let `us` have too much variable money from them. They are quite happy for us to owe them fixed amounts - loans; but not the variable stuff - like CC & OD.

This is why, personally, I am not too worried about my mortgage or loan - fixed term payments, bank happy knowing what income they are getting from me & when.
Its the CC & OD, that they could call in! These are the easier ones to call and they are easier, more likely?, to default on!

So yes, all this talk is scary, but I am doing MY best to get rid of those particular financial products quickly.

rog2

Bismarck wrote: »

..and they make the rules up as they go along. :mad:

They certainly seem to be doing just that, although, once again, it will hurt those who can least afford it. :mad: :mad:

ZTD

SamanthaA wrote: »

To be honest, have read all of the thread & not understood some of the more technical jargon -Keynesian liquidity trap, BoJ & ECB ?

Sorry...

Liquidity trap:

Under normal times, the banks borrow money from various sources and lend it to the public. The price of this money is set (to a large degree) on the first thursday of the month. That's when your mortgage rate and (to a lesser extent) your other interest rates go up and down. In this way, the Bank Of England can stimulate the economy by making borrowing cheap.

However, lending to the public is fraught with problems - i.e. they might default. So when there's a panic on, the banks stop lending to the public, and buy gilts instead (which are issued by the Government, and so can never be defaulted on). Credit for the public dries up. So in effect, the Government injects money into the banks, which then injects money into Government debt. The public never sees the money that the Government has made available so cheaply. This then stymies the Government's attempts to stimulate the economy, which slides deep and deeper into contraction.

The liquidity (money) is trapped between the banks and the Government.

BoJ: Bank of Japan.

ECB: European Central Bank.

SamanthaA wrote: »

But the jist is what I have been expecting for some months
That banks cannot afford to let `us` have too much variable money from them. They are quite happy for us to owe them fixed amounts - loans; but not the variable stuff - like CC & OD.

The fixed loans are set by contract (except Cahoot flexi-loans - AVOID!), so if you keep up your side of the bargain, they *can't* call them in early. Though it has become more difficult to get new ones.

kel123_2

A similar think happened to the midlands bank back in 1985/6 when it lost money in the colonies. At the time I had a £600 overdraft on a business and they called it in. Now a friend of mine was 2.5K overdrawn on his business account and they never asked for his back. They only asked for the ones that they had a realistic chance of getting in. Well we all know what happend to them 'HSBC' in new money. I think interest rates are going to have to rise to stop all spending and make people save therefore the banks would not have to go into there reserves.
For those old enough (I am JUST!) it happend in the late 60's early 70's and I see a resemblance to then not to 1991, I am waiting for PM Mr Bean to utter the imortal words 'This will not effect the pound in your pocket' well he's trying everything else!
Things I believe will have to get worse before they get better and alot of folk are going to be in alotta lotta trouble, it may be some comfort that those already in the system (us) have an head start so we should be able to weather the storm better than most. This is definately the time when money begets money and the one to watch is GE Money

Nice rant hope you enjoyed my slant
Kel

Bismarck

As ever, ZTD, you are helpful.

I gave up trying to compare and explain economic theory against what the government was doing when I finished my degree in the early nineties....their actions and results are beyond modelling behaviour!

My feel is that, more than ever, they will be happy to lend to the least risky at a competitive rate...cherry-picking their safe profits. I can't see them calling in any safe profit-making deals whether they are overdrafts, CCs or loans for some time yet - unless the punter does something to make the bank nervous....