Barclays personal reserve

MrDinkle

I would just like to clarify something, I have spoken to Barclays about this and pressed them for a black and white answer which was some chore.

Effectively this new 'personal reserve' could potentially allow them to charge someone as much as £1332 in a single calendar month.

- The charge is £22 per 5 day period just for using the reserve
- Average month 6 x 5 days = £132

This works out at £42 pounds MORE than 3 paid referrals @ £30 each which is the current limit

Add onto that £8 per unpaid / returned / honoured item to a limit of 5 per day = £40

£40 x 30 = £1200 in a month (really really worse case)

This could spiral out of control for somebody who has a cashflow problem which would IMO compound problems worse than the current system.

And they are doing you a favour by opting you in.

This is SO wrong.

Taffy99

It's not a £22 Overdraft fee for the first 5 days; it's £22 EVERY 5 days Overdraft fee.
It doesn't end there - It's another £8 for EVERY debit that is accepted / declined while you are overdrawn.

If you get paid monthly, and you go overdrawn, unless you have a generous fairy-go-mother, you won't have a regular income into your account until the next month. All your Direct Debits are setup to go out of your account straight after Payday.
That means, the bank gets to charge you £22 EVERY 5 days for the next month to start with.
£22 * 6 = £132
We make an average of 30 Debit transactions per month - if you're overdrawn, that's an £8 fee for every attempted transaction -whether it gets paid or not.
£8 * 20 = £160
It gets worse - when your Direct Debits fail, your supplier(s) re-attempt the failed direct debits upto 3 times - just to make sure - that's another £8 EVERY failed attempt.
£8 * 9 = £72

By the end of the month, you get a letter through the post telling you all this, and the Bank has helped itself to £364 of your money, straight out of your account in month 1.

Payday comes, (Phew), you've learn't your lesson, and you've promised to check your account more carefully and spend less now. You keep only your essential Direct Debits, cut down on nights out and new clothes, and chalk it down to experience.

Payday money goes in, the Bank helps itself to the £364 straight out of your account - no 30 day payment terms here - and then all your Direct Debits go out - tipping you just overdrawn by £10 - hey, you've done alright, Barclays did rip you off to the tune of £364 so £10 overdrawn is nearly there. And you resign yourself (and your family?) to beans on toast for a month (ugh).

It's over right?

Wrong! here's where the "Personal Reserve" charge really comes into it's own:
Month 2:
week 1: £10 overdrawn sir/miss? That's £22 please, week 2: £32 overdrawn? that's £22 please, week 3: £54 overdrawn? that's £22 please, week 4: £76 overdrawn? that's £22 please, week 5: £98 overdrawn? that's £22 please, week 6: £120 overdrawn? that's £22 please. TOTAL = £10 overdrawn + £132 in charges / month.

If you don't manage to get into credit the next Payday, you are officially locked in the "Circle of Debt", and the Bank has you right where it wants you.

The problem with the £22 every 5 days system, is it's designed to keep your debts escalating - even if you stop spending.

As the majority of people get paid monthly, the Banks are looking to harvest £132 out of even the most careful customers.

The 5-day rule was chosen because that's how long it takes for money paid in to clear - so if you pay in enough money to clear your current debts, by the time the cheque/BACS clears you've incurred another £22 charge, and you're back in the circle of debt.

Save yourself (and your family) the pain - return the Opt-out form AND phone your bank to tell them - just to make sure they don't "lose your form in the post".;)

rail.link

I received written confirmation of the opt out.

Quibbler

The problem is not whether this is a good account it is the automatic opt in. I am at the moment working overseas and ther is no guarantee that the opt out form will be recieved by Braclays as the postal system here is not good. So I will have to waste more money phoning them. I've already spent $4.50 posting the form back as the post paid envelope does not work here.

I had a similar problem some years ago when they automatically changed my deposit account to an off-shore account (I closed it first).

ShelfStacker_3

jayjones wrote: »

It's not a £22 Overdraft fee for the first 5 days; it's £22 EVERY 5 days Overdraft fee.
It doesn't end there - It's another £8 for EVERY debit that is accepted / declined while you are overdrawn.

No, it's not. You have to pay £8 for every debit accepted or rejected that will take you over your Reserve amount, and needless to say if you're at the point where you're up to the limit on the Reserve in the first place you should be asking yourself some very potent questions.

Also, your example assumes that the charge is for every 5 days - it's not, it's every 5 working days, so a week - and that you stay over your limit for an entire month, which most sane people would not do even in the direst circumstances. Assuming you're just over your limit for a few days, as most people usually are (because they notice their slipup and move to correct it) then the charge will just be the flat £22. The most you'd be charged for a typical month in the Reserve is about £97 ((31/7) * 22), but as we've already ascertained nobody except the most frankly idiotic idiot in the entirety of Idiotland would stay in their Reserve for that long - especially since Barclays send you a letter to say you're in it, which takes a fair amount of effort to ignore.

You may as well say that all parking fines are bad because if you parked on double yellows every day and got fined £40 each time it would amount to a large sum of money. It's a useless comparison, because nobody in their right mind would do that.

2DCube

I am absolutely astounded that Barclays have imposed this ‘stealth tax’ on its customers! My wife and I are really feeling the pinch with rising fuel costs and our recent mortgage repayment hike. To think we have to opt out is a smack in the face for most sensible people but for the most vulnerable who are already maxed out it may be the straw that breaks the camel’s back. I was once a student in the 90’s withdrawing money from the hole in the wall until it didn’t flow anymore - I know how easily the debt racks up – I’m still paying for it. If this is on offer to all customers in the UK how much did this bright idea cost? The amount of paperwork and postage costs, receiving the letter and opting out is disgusting.

ShelfStacker_3

2DCube wrote: »

I am absolutely astounded that Barclays have imposed this ‘stealth tax’ on its customers!

Hardly a stealth tax. It's not a tax for a start, and they sent you a letter clearly stating what the cost was - not exactly stealthy.

My wife and I are really feeling the pinch with rising fuel costs and our recent mortgage repayment hike.

They're not charging you for it unless you use it, i.e. go over your overdraft limit, and even if you did use it it would then for most purposes be cheaper than the equivalent fees if you went over your limit without one.

To think we have to opt out is a smack in the face for most sensible people but for the most vulnerable who are already maxed out it may be the straw that breaks the camel’s back. I was once a student in the 90’s withdrawing money from the hole in the wall until it doesn’t flow anymore - I know how easily the debt racks up – I’m still paying for it.

Not even the "most vulnerable" will stomach paying £22 a week for some money except in the direst circumstances, especially when Barclays tells them how much it will cost when they start to use it.

If this is on offer to all customers in the UK how much did this bright idea cost? The amount of paperwork and postage costs, receiving the letter and opting out is disgusting.

Isn't it free to opt out, just as it's free to remain opted in?

Honestly, this is a fuss about nothing. The financially responsible won't use it, the financially irresponsible who probably go over their overdraft limit all the time will probably get charged less. Life goes on. There's no point opting out if you're not going to use it, for god's sake... it's work for no perceptible gain.

biggles200

However responsible one maybe with one's account, it is the error's by the bank (and Barclays do error) that can cause the account to be overdrawn. Barclays are not good at correcting their errors and for this reason this scheme terrifies me. Before there was a cut off that stopped the account when thing went wrong. Now things will escalate and make matters worse. It took me 3 months to get Barclays to admit that they were paying someone else's direct debit out of my account. If I go over my overdraft limit, I want the bank to stop payments, not continue and make matters worse.

LJB1

Hi there,

I've just received my notification of the reserve feature this morning. Agree totally with this being a dangerous and money making scheme.

I totally agree that this is to create revenue - alongside barclays other options due to the credit crunch losses they have made

Opt out schemes create more users as:
1) Some people can not be bothered to read info sent to them. The envelope does not suggest response is required
2) Some people do not understand the information, especially when this includes many sheets of information
3) Some people never receive the information

I am afraid shelf stacker you may be able to read and understand info but this does not apply to every person in barclays' current account book. Those who fail to read the information or do not understand the feature WILL pay more in fees and will be taken further over their agreed facilities which is very dangerous and is hard to get back out of.

This is a costly scheme and if you have no overdraft or a small overdraft you can at times accidentally go over your limit. I work in a bank and have first hand knowledge of this.

To charge £22 for every 5 days that someone is overdrawn is not a nice feature of an account.

Giving that barclays are honouring payments whilst in a reserve you are more likely to exceed this new limit. Especially as £22 keeps being debited every 5 bank working days. If this happens barclays will then charge £8 fees for every payment that then cannot be paid.

If you are in your reserve for 10 working days you pay £44. Thank you barclays!! This is before you realise you are also significantly past your bank limit.

This allows a customer when checking their limit to presume they have £1000 more available funds. A credit card would certainly be a better option in this instance for card spending so long as the funds are repaid on receipt of the bill.

At a time when people are struggling to make ends meet and more likely to go over their overdraft barclays would be providing a customer service only if they contacted customers who regularly exceed their overdraft and suggest a personal review which finds out the cheapest way for that customer to keep their affairs in line.

It may be that most customers need just a small increase in their overdraft facility that is free and costs minimal in interest.

If you can't see that you should opt in to this service if you want it and not force this on people who in most cases will end up with it without meaning to then this is a strange world.

There are cheaper more customer friendly options barclays knows this, not all customers know there other options and in this case barclays are looking for a quick fix to their bank balance

MABLE

I declined their offer and today received a letter from them advising that if I go overdrawn without permission the penalties that would be imposed on me. Well I opened an account with them with £1.00 to view my ISA on line. Do they really think I would want them as my regular bankers. I don't think so!