Yearly charge for overdraft?

Keeley_P

Hi guys,
I'm with First Direct, and i've just had a letter through saying they've done the annual review of my overdraft. Fair dos. So its stayed exactly the same, i''m happy with that, but then i notice that it says that there is a £25 "arrangement fee" for this, that will be taken out of my account "when my new overdraft is activated". Can they do this? To me it seems like they're just taking £25 for sending me a letter telling me I can keep my overdraft!

Rafter

Keeley,

HSBC seem to be using First Direct as a bit of a test bed to see what customer reaction is to various different charges.

Because it is highly likely that banks won't be able to charge overlimit fees and refused dd fees, they are looking at different charging models.

If £25 seems too much or unfair, call them and tell them about it. If they won't waive it then threaten to move your account elsewhere.

That will then tell them that charging for overdrafts isn't acceptable and they might rethink.

However, they have to pay for all those staff, ATMs, frauds, processing costs somehow.

Much as many on here would like huge interest rates, great uk based customer service etc, you can't have it all and banks will either go out of business, or find a way of covering their costs by reducing services or charging for them.

R.

Night-owl_6

They have every right to charge a £25 fee, A & L charge that fee also for set up and renewing the overdraft.
It will be in your T&Cs to which you agreed to keep to when you opened the account.
However if you are not happy with that fee sometimes banks will void it but remember you did agree to this, either at the start of opening you bank or when they informed you of it

Milarky

Got a similarly worded letter from HBOS today (re. existing overdraft):

I am writing to tell you that your review date for your existing overdraft limit is 11th June 2008.

From this date your overdraft limit will be [what it is today] based on our knowledge of your account. If you would like to change your limit .. we will be happy to review it at any time. You can apply online, over the phone or in a branch. We can usually give you an instant decision. In order to maintain an authorised overdraft you must pay your salary or other regular credit into you account.

[28.8% EAR!]

Now am I being over-sensitive here or is Halifax planning something (apart from raising the interest rates) regarding overdrafts?

regularsaver1

All Halifax overdrafts are now fixed term (maximium of 12 months) rather than standby (there was not a particular review date before), so there is a review date.

of course overdrafts are reviewable at anytime anyway.

i know that some of these letters have been sent in error, so worth checking
as you overdraft isn't prob reviewed then, till Feb

They did announce last year they were going to have an arrangement fee over £300ish, but went back on there word and didnt go ahead with it

ps, if your overdraft rate is 28.8 - this makes me think that you don't have a high interest current account??

Tra77

I too have had the letter from first direct to 'renew' my existing overdraft facility (which they originally set, way back when I first opened my accout with them). Whilst I don't make a habit of going into my o/d occasionally my mortgage comes out a day or so before my money (from current account -A&L) transfer clears (I use fd as my 'bill account'), especially if date(s) fall on weekend or bank hols. I'm therefore reluctant to cancel it completely - which make me wonder if they've targeted me for this reason:rolleyes:.

I'm going to give them a call about this and possibly transfer this account to A&L, if no joy.

Although it makes me wonder if all banks will soon follow suit???

pm84280

I've been a customer with First Direct for just over 10 years and the last year has been rather sad.

In the project world we suffer from scope creep; in First Direct's world the disgraceful use of charges creep compares to labour's 10 years of stealth taxes.

1) The 6 monthly overdraft charge. So not only do you pay for going overdrawn, you then get charged a further charge for having an overdraft. Nice double whammy if ever there was one

2) They declare the interest free overdraft buffer of £250 on the one hand, but of course take it all back and then some by offering a whopping 0% interest on all credit balances on your current account.

3) Do you enjoy, as I do, the wonderful text service? Very useful heads up to tell you that you have gone overdrawn on that day and you can therefore move money in from your savings account on the same day to cover (so you don't get charged). Not any more. They claim this is predictive so not helpful. Instead you don't get the debit activity until the next day, by which time (you've guessed it) you are overdrawn and will be charged £30 for it. Oh, and the £25 ovedraft arrangement fee. FD are right and this is clearly to help its customers and is definately NOT a money making scam.

4) It used to be if you hit your overdraft limit you could not take out any money, or use your debit card for online purchases. Not any more. There is nothing to stop you now, so coupled with the text service you are on your own to go overdrawn, and, yes, you guessed it, incur the charges.

Have I missed any other 'charges creep' charges from FD?

I cannot deny that FD are top of the pops for customer service, and I am trying to hold off switching because the internet service is so good, and I fear from looking at A&Ls demo GUI that it looks poor by comparison.
But seriously FD, there is only so much I can bear, and your time is so very nearly up.

Cloudane

From what I've heard on other threads, the £25 fee is "waived" if you didn't go over the overdraft limit in the previous year. Always check though. But I think it's just their way of charging an over-overdraft fee without being done for it.

I can't blame them - can you imagine if everyone got their way and banks were unable to charge anything for exceeding your overdraft limit? Everyone would just "borrow" a few million pounds each and be rich for a few minutes, shortly followed by the complete collapse of the economy :P

pm84280

Er, no offence but that is utterly ridiculous reasoning.

I don't think the idea of a £25 charge would put someone off 'borrowing' millions of pounds (if indeed it were possible) do you?

The con is that you get charged £25 at the point you go overdrawn (unauthorised). You then get charged £25 for an overdraft arrangement fee for each 6 month period in which you have an unauthorised overdraft.

To me that begs the question, how can you charge me for an unauthorised overdraft then? You can't have your cake and eat it.

Cloudane

Yeah ok, that was a poor example.

But what I mean is, I can't see why people think it's unfair to get charged more for going over the OD limit? You can't just take money without permission. Surely that in itself is unfair, or is it classed as okay because it's a company?

Fighting against truly unfair charges (e.g. £70 for going under by 10p for a day) is fair enough, but people who are trying to get away with unauthorised overdrafts with no charges for all they can get are essentially costing money for those of us who can manage our finances IMO, as someone has to pay for it. £25 is a better deterrent than nothing.

To me that begs the question

No, it doesn't.

how can you charge me for an unauthorised overdraft then?

My understanding was that they charge the arrangement fee instead of the unauthorised overdraft fee. But maybe it's just an extra slap on the wrist, which is kind of what's needed anyway to get people to stop sailing so close to the wind.

Sorry if I seem unsympathetic, but it really doesn't seem that difficult to know your limit and keep a reasonable buffer above it and/or manage finances so that it doesn't happen, especially for anyone savvy enough to be posting on here.