Barclays "Personal Reserve"

Lonewolf10

Hi,

This is my first post, so forgive me if I am treading over old ground.

I recently recieved a letter (dated 6th June 2008) from Barclays about a brand new thing they have. Basically I currently have a overdraft limit of £100 (I assume we all know what that means), but now they offer an additional £150 ontop of that (£250 max overdraft) called the "Personal Reserve".

Of course there is a catch otherwise I wouldn't be posting about it here. As I understand it, if I were to use said Personal Reserve (eg. I have £1000 in my account, but send out a cheque for £1200) I pay £22 for the first 5 days of use, plus an additional £22 for the following 5 days if I'm still using the Personal Reserve (e.g. I haven't paid in any money to put my account into the overdraft - -£100).

Simply put this is around £88 per month! They state "5 working days", which is £22 per week. We were better off before (paying £30 per transaction that sent us over our overdraft limit)!!!


Warning: If you got this letter in the post then remember to send Barclays the "Reserve Opt-out Form" attached to the bottom of one of the forms by 1st Aug 2008 and check your details on the form to make sure they are correct.


I am sending mine back in the post tomorrow and "It Pays To Watch" was (is) an awesome show. I know I have saved some money


Regards,
Lonewolf10

joolsybools

Complete rip off, thanks for the warning!

Chell

I just came on to see if anyone had posted about this. DH must have read it worng, he spoke as though he'd be charged £22 whether he used it or not. I've his opt out letter here to post anyway. I don't think he ever uses an over draught.

yorksbabe

hi, i got this letter but i dont have an overdraft so it wont affect me will it?

jo_b_2

Lonewolf10 wrote: »

Hi,

This is my first post

Regards,
Lonewolf10

Hi Lonewolf10 and welcome to MSE! :wave:

Thanks for the post. I certainly haven't heard about this before (although admittedly I'm not a Barclays customer.)

I've moved your post over to the Current Account board where it should be of interest to even more people.

(PS: This might be a good time to see whether this is the best current account for your needs too!)
http://www.moneysavingexpert.com/banking/compare-best-bank-accounts

Martin’s asked me to post this in these circumstances: I’ve asked Board Guides to move threads if they’ll receive a better response elsewhere(please see this rule) so this post/thread has been moved to another board, where it should get more replies. If you have any questions about this policy please email [EMAIL="abuse@moneysavingexpert.com"]abuse@moneysavingexpert.com[/EMAIL]

Lonewolf10

Yorksbabe,
It probably won't affect you if you never use your overdraft, but there is always a first time - especially with tough times ahead financially.

Chelltune,
It would only cost £22 if it was used and then you paid in some money into your account before the first five days were up, to put it out of the "Personal Reserve" and into your overdraft, or better still into the positive (actual cash in the account).

Jo__B,
Apologies for starting this thread in the wrong forum. I didn't realise until it was too late. Thanks for moving it.


Regards,
Lonewolf10

PS. I can keep the paperwork if necessary (eg. for proof).

sarah_smurf

I've also received one of these letters and in the bin it went... and off to the bank I am to cancel it, as I saw the charges and sort of shredded the letter thinking what a load of cods wollop

jarviser

There is some missing information in the original posting. Firstly the instructions do not explicitly say what you will be charged if you opt out and then go overdrawn, or exceed your overdraft limit. One has to assume that all your payments will be cancelled at £8 per transaction so it depends on how many transactions are likely to go over. More than 3 and it's more than the £22, so a "busy" account may benefit from the reserve.
Secondly the Personal reserve is just what it says - Personal. Mine is £1000, the original poster's is £150, so presumably they look at your typical balance and transaction size before offering the reserve amount.
It's a pity that we do not trust banks any more, but I don't, and I have been with Barclays for almost 40 years. They take longer to clear cheques now than they did when I joined and they had bank messengers with little leather satchels and typed up your account by hand. I shall opting out simply because I will never use it and as we have been given such short notice, it must presumably be in our favour to opt-out . What a sad state Banks have got into.

stratdude

I got this letter too, i am gladly going to reject it.

hgeytghgggggggggg

In my case, Barclays are offering me a loan of at most £150 for up to a week, so interest of £22 is extortianate! The effective annual rate of interest would only make any sense in Zimbabwe (it's about 120,000%).

jarviser comes off better. Because the interest is fixed at £22, the scheme becomes more competitive as the personal reserve offered gets larger.He was offered a loan of £1,000. In the best case scenario where jarviser uses the entire reserve on Monday and then only pays it back on the following Sunday, the APR is now 210%. Still eyewatering but no longer catastrophic.

For comparison, to achieve an APR as low as a particularly bad credit card, you'd have to be offered a reserve of £3390, for which the APR is 39.8%.
And for a competitive loan with an APR of 10%, you'd need a reserve of £12,000.
Remember that these APRs are far higher if you don't use the whole reserve amount, or pay it back earlier than you have to.

So I'll be opting out of the scheme until I'm offered a five figure reserve! My guess is that Barclays are trying to make the penalties that are being reclaimed become legally sound fees. You can watch their videos at http://www.barclays.co.uk/personalreserve/ where Mr Average - drama teacher Sam Parker - faces everyday struggles but gets through the week with the help of his personal reserve. Cynics like me are left with a sore taste in our mouths.

My impression is that consumer banking is subsidised by those suffering the greatest financial difficulty - who don't have strong enough credit ratings to take an ordinary loan, and are often on the edge of their overdraft limit. While this makes sense financially since banks are loathe to charge customers in credit who provide the bank with deposits to invest, and it even subsidises my own banking, it doesn't seem particulary fair.

Other charging schemes include monthly accross the board rates, not paying interest on current accounts in credit (my rate is 0.1% so I don't think I'd miss it), or charging for actual costs incurred e.g. a penny per cheque, a penny for cashback, perhaps even a pound for seeing a cashier.

Any of these might be far better ways of taking the stress out of Sam Parker's week than the personal reserve.

Josh