So it is true the simplistic charges £1 and £5.
If you are in the delicate situation of being overdrawn on your current account and this is a reasonable amount try to open a credit card account that offers you the longest 'zero' rate on balance transfers, I believe some are extended to 15 months. During that time budget your finances to clear the balance (as much as possible).
This would be a short term fix for some people but not everyone.
I hope it helps
Well, anyone who dips into an unauthorised overdraft (or exceeds their limit) on a frequent basis for a start.Originally Posted by Rave
Under the old system, if you either went into unauthorised overdraft, or exceeded a limit, you were subject to £35 per transaction, for up to 3 a day. That means you could have copped up to £105 a day, and could have copped it several days running if you messed up. And that's just the paid or unpaid item fee charges, let alone any overdraft charges or interest.
This way, you cop a maximum of £5 a day for doing the same thing.
Someone else it might suit is someone that deliberately decides to use (or exceed) an overdraft facility, and wants to know in advance exactly what it's going to cost. For instance, I'd prefer to know that if I use a facility, it's going to cost me £x. For example (and assuming I've a facility in place), it means I can decide to pay for something from this account, knowing my regular paycheck will be going in a, say, three or four days, and that it's going to cost me £1/day or £2/day (depending on the sum involved). I might buy a large item or pay for a holiday that way, say by debit card, rather than go to a branch to manually transfer money. I hear people saying (transfer it via the internet), but suppose I either don't trust internet banking, or don't have access to a net connection, or for that matter, don't have a computer. Not everyone does.
I'm not saying this scheme will appeal to everyone, and it clearly doesn't, but it does have it's advantages. One of them is avoiding any possibility of unpaid/paid item fees ..... and that includes the £8 per item Barclays charge. The point of this structure is simplicity and predictability. If people prefer potential for lower charges coupled with the risk of fairly substantial unexpected charges, well, I guess they will (or have) voted with their feet.
From the letter I received(Halifax customer...) and what I have read in here I find the new charges to be very detrimental to my use of my overdraft facilities.
Currently I am able to take out up £500 interest free(arranged my limit to be reduced to £100 maximum) so long as the amount is paid within 28 days of using the over draft. Now this is extremely beneficial to me because it allows me to purchase items at the beginning of the month that will be greatly beneficial to me during the month without paying any charges what so ever. I can also take advantage of pre-order offers for software I am interested in without having to fit the bill right away.
At this very moment I have received a pre-order copy on Windows 7. I was required to pay for it back in July when I didn't have enough money to afford it(£45 offer). Currently, having paid the charge off the next month, I incurred no charges and got the software I wanted at a greatly reduced price. Had the new system been in place I would of had to pay £25 worth of charges for my pre-order which would of meant waiting until release and purchasing the newly released copy of Windows 7 for £70 making the pre-order offer redundant.
Instead of the pre-order offer saving me money I would of had absolutely no benefit from it with the new charges being implemented. I don't make a habit of using my overdraft facility but when I do want to I'd prefer the use of it to be free instead of incurring a daily charge regardless of how much I am over.
Obviously there are beneficiaries of the new system, there is always a target market, but I find I am not a person who will be in that group of people. I really hope this is either a test to see whether OFT will be happy with the new charges (possibly edit them later to conform to the OFT ruling) or that we have simply misunderstood the charges. Instead of a set charge for absolutely all overdrafts they will replace interest rates on current accounts leaving interest free overdrafts as the are, free within set guidelines after which the charges apply.
If not Halifax then I hope other banks offer a package that is simple to understand and beneficial for my intended use. The simplification of bank charges is a welcomed change for sure, just the way it is seemingly implemented is not desirable for me and it seems for quite a few others on this forum and also elsewhere considering watchdog did a program on it.
Change is always difficult but I do hope it ends up benefiting us in the end.
I think one of the things this change brings out is that people need to realise something - banks aren't there to benefit customers. They're there to benefit shareholders. No seriously, customers are a cash cow to be sold stuff to, and our function, as customers, is to pay up.
Realise that, and you realise that banks aren't our partners, or our friends, or working in our interests. The relationship we have with them is adversarial.
The lesson to be drawn from that is that we need to wise up about banks. We can work things to our advantage, and if we want to make the financial best of it, we need to work at it a bit. Make sure you understand the T&Cs of your account, whether it's Halifax or not, and before changing, make sure you understand the implications of any new account. Then, if it suits, switch.
Rave mentioned earlier about his Barclays account being much cheaper (or that was how I read his comments anyway). Yesterday's Working Lunch looked at these charges, and one of the accounts they compared to was Barclays. Apparently, at least on some accounts, one of the Barclays terms is that if an account is unused for a year, they remove the overdraft and buffer zone. Then, if you go overdrawn, you can get charges of up to £40 per day.
So, supplose you leave an account dormant for a while, don't realise the overdraft facility has been removed, then start using it again and it drifts into what you thought was an authorised overdraft but isn't. At the end of the month, when you get your statement, you find you've incurred x days of charges at £40 per day. You could, in extreme cases (at the rates WL mentioned) get £1200 in charges in a 30-day month. With Halifax, it's a maximum of £150.
I think there are some golden rules for domestic (and probably small business) banking, and we ALL need to understand that the charges court case is changing the face of retail banking.
- your bank is not your friend.
- they work you, so work them
- understand your account terms
- keep aware of your balance, manage your money properly
- not all accounts are the same - pick one right for your circumstances
Comparing is hard, especially when the devil is in the detail, and I have no doubt at all that it is deliberately made hard. It's very hard when you're trying to evaluate what it'll cost you if you do this or that, when you don't know whether you'll do this or that. You have to place a value on what level of risk you're prepared to take - are you prepared to risk that £40/day you could incur at Barclays .... but won't, if you run your account properly?
It's been suggested that the court case, which should be decided within the next month or two, will result in large changes in bank charging. I think this Halifax move (and many others) is evidence that it already has. It's also been suggested that if the court rules that "fairness" is the criteria that determines the legality of these charges, that the OFT will change banking regulations to require them ALL to outline what their charges would be is about seven scenarios, since at the moment, the all have different terms and conditions and it's virtually impossible to do any sort of direct comparison because they're pretty much all better value than the competition in some situations and worse in others. So what suits depends on your circumstances, and how you use your account.
But the big picture is that we all ought to pay more attention to our accounts, keep an eye on the balance, and don't ever go overdrawn accidentally, without understanding what it'll cost you if you do. Also, be aware of what might happen if, for instance, your salary feeds your account and your employer screws up and remits your salary late, because if you incur charges that way, it's not the bank's fault and you'll probably wind up arguing about it with your employer. Personally, I feed my current account from savings accounts where I know the money is available, and feed the savings accounts from income. Though, clearly, that's fine if you have savings, but not always possible. So perhaps another message is to be careful about buying things if you can't afford them. Maybe we all ought to be less reliant on credit to support our lifestyles?
Me too!
Nice post Sarcen, great advice. I hate to boil your post down to one sentence but having the entire wall of text is a bit much for what I would like to say. So sorry if this seems inappropriate.
I find this true not only for your bank but any company currently in shareholder existence, as you mentioned. They treat you like sheep and as such I treat them with disdain and contempt. This horrible scenario only breeds negativity and nothing good can come from that.
I find this vicious circle is what OFT is trying to break with the changes and I think it is a good thing. Without a change in outlook and approach the changes OFT enforce will be of little benefit. Should banks and companies alike treat customers with respect you'll find it to be difficult to treat them differently. Once we start working for each other, instead of against each other like we currently do, things will be far better for everyone involved.
Conflict is never an answer, its an archaic concept that should of been erased from our thinking a long time ago. Constantly fighting means one side is always going to loose, how could that ever be a good thing?
One should look to benefit himself and all those around him, not benefit himself at the cost of all those around them.
Not a problem at all.
And I agree, largely, about all companies acting in shareholder's interests, and it should be no surprise, because management are actually obliged to do so .... to they'll get fired.
However, it's not necessarily the case that acting in shareholder's interests is in conflict with providing good service at a reasonable price, and providing good customer service too. For instance, there are some retailers that provide good service and some that don't. As an example, I've been buying car hifi, alarms, etc at the same shop for about 30 years. I've got to know the owner, often sit out the back having a coffee and a chat, inquire about each other;s families, etc. Yet, I don't know him socially. He's a supplier and I'm a customer. But when I've had an issue with a product, he's bent over double to help. He treats me really well, and as a direct result, he gets all my custom, and quite a few glowing referrals too.
He knows what banks, IMHO, used to know, and in the last 20 years or so, seem to have forgotten - good customer service = good customer loyalty. The experience with a bank is not what it was 25 years or so ago. Nowadays, it seems largely soulless, and you get the distinct impression that computers make nearly all the decisions, managers are little ore than glorified salesmen and, as a customer, my sole function is to cough up profit, and what's worse, on each and every single opportunity, and to the maximum they can get away with. And you know what? I don't much like the feeling.
I have great respect for my car hifi shop, but little or none for banks. They'll get some respect from me when they start deserving it.
Oh, and the same goes for insurance companies. Pretty much everything I said earlier applies directly or indirectly to them.
And just for clarity, in case anyone wonders, I'm not talking about the staff in banks, most (though not all, but that's another story) of whom in my experience are polite, pleasant and helpful people. I'm talking about the corporate culture.
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