Halifax Current Account... ARE THEY SERIOUS?

[Biscuit]

I got a letter from halifax today which literally blew me away in suprise.

After being with them for... well all my life pretty much i got a letter today introducing their new 'clear and easy' scheme for managing overdraft fees.

£1 a day for overdrafts under £2500
£2 a day for overdrafts over £2500
£5 a day for any unaaranged overdraft usage

Do they really expect anyone to stay with them after introducing such insane charges?

Once i have looked through all the paperwork im going to move around all my direct debits etc and close all my halifax accounts... appauling treatment of customers it really is.

[Barry]

I dropped them after they charged me £35 for a failed direct debit that was their fault to start with.

[spoon_]

wow! Some crazy charges there, like in the supermarket lol

Till what extend you've been using overdraft on your accounts?

[TooNice]

Wow, I am not sure how it compares to most other banks but I can say that Smile is a lot better. I normally only keep a small sum in my current account and 'top it up' before major any major standing order (rent) or DD (credit card payment). I was hospitalised earlier this month and wasn't able to top up my current account before my credit card payment was due, and ended up going beyond (the rather modest default) arranged overdraft. Rather than slapping me with a large fees as I am sure some banks may do, I came back from the hospital with the following note:

Hello Mr X

We have noticed that your account has become overdrawn today. We recognise that this may just be an oversight and we think it's only fair that we give you an opportunity to avoid some or all of the charges related to this informal overdraft.

If you return your account to credit (or to within your agreed overdraft limit) by [couple days later] we will waive all of the Informal Overdraft Service Charges and Unpaid Item Charges that you incur between now and the point when your account is no longer overdrawn. If you have already done this then you need take no further action.

Of course, they politely warned that charges would apply next time in a follow up confirming that the charges has been waived but usually I'd expect to be slapped the fees first, then having to negotiate a refund by apologising and explaining the reasons.

[Biscuit]

I dropped them after they charged me £35 for a failed direct debit that was their fault to start with.

Yeah they are not very reasonable about charges liek this

wow! Some crazy charges there, like in the supermarket lol

Till what extend you've been using overdraft on your accounts?

Are you referring to the new scheme? If so then as soon as your in it you get charged.

Wow, I am not sure how it compares to most other banks but I can say that Smile is a lot better. I normally only keep a small sum in my current account and 'top it up' before major any major standing order (rent) or DD (credit card payment). I was hospitalised earlier this month and wasn't able to top up my current account before my credit card payment was due, and ended up going beyond (the rather modest default) arranged overdraft. Rather than slapping me with a large fees as I am sure some banks may do, I came back from the hospital with the following note:



Of course, they politely warned that charges would apply next time in a follow up confirming that the charges has been waived but usually I'd expect to be slapped the fees first, then having to negotiate a refund by apologising and explaining the reasons.

Whilst my reasons where not as serious as yours, when i was in my final few weeks of uni during exams and heavy coursework i was a total recluse sat reading books and typing. During that time i forgot to transfer money across into my account to cover my direct debits etc and they charged me like a total of 90 pound... i of course was a student and had very little money at the time so i went in and discussed and they said thery would refund one of the charges but the others still applied... then they continued to apply the charges as i couldnt pay them all off. I eventually payed it off and let it go seeing as it was actually my fault but this here is the final straw.

[Saracen]

I can't see what's so bad about this. After all, this replaces the previous charges, and it replaces previous debit interest.

Some accounts, previously, would incur 2.2% per month (29.8% AER) interest on overdrafts, on top of other charges, like up to £20 per day for unpaid items, £20 per day for paid items and a £28 fee for any month in which you have an unarranged overdraft.

So, previously, if you went into an unapproved overdraft, you might cop £28 for doing it, £20 for an unpaid item and then interest on any outstanding balance at up to 2.2% per month.

It's also worth bearing in mind that these are overdraft fees, and really, current accounts aren't supposed to be in overdraft. They're supposed to be for spending money you do have, not money you don't have. So the simple way to avoid these new fees is just to not go into overdraft.

Under the old scheme, suppose you goofed and didn't realise you'd gone into overdraft. As a result, you wrote four cheques (or used debit cards) on several days during a month before you checked you statement. That's £20 per time, so £80. It also took you into unapproved overdraft (or exceeded an approved one), so you get another £28. That's £108.

Then, on three occasions (different days) during the month, you have direct debits going out, You'd have caught a £20 charge for each of those, so we're now at £168.

New or old, unauthorised use of your bank account for things it wasn't supposed to be used for could get right expensive, right quick. It still can, of course, especially if you go into unapproved overdraft.

But the message from that is keep your finances under control.

In these days of easy internet access, it's not that hard to check your account once or twice a week, or even daily if you feel inclined. So if you monitor your account, keep your balance under control, and rectify it if you goof, then it shouldn't cost much. £1 a day (and no interest) doesn't strike me as that bad for an approved overdraft, especially if it's close to the upper limit. A £2499 overdraft for £30 a month? Good deal if you ask me.


And you know what this is all about, of course? The final decision on the court case about bank charges is getting close now, IIRC, and this is (IMHO) the Halifax repositioning their charging structure to something simpler, and essentially non-transaction based.

Under the old scheme, the argument was that charges were punitive and bore no resemblance to the cost of the transaction. This repositions them. They're now (IMHO) clearly positioning to be able to say that an approved overdraft is a service, for which they charge a daily fee, and so is an unapproved one but since it's unapproved, it's more expensive. Therefore, as it's a charge for a facility you chose to use, the basis on which bank charges have previously been calculated is no longer going to be used, so they can't be unfair. Instead, you pay a fixed fee for a facility. If you don't want to pay the fee, don't use the facility.

And I wouldn't bank (excuse pun ) on doing much better or getting anything much different anywhere else. My bet is that if other banks haven't done much the same already, it won't be long before they do.


Consider - use a current account as it's intended to be used (as a holding centre for YOUR money) and only spend what you have and you won't pay any of these charges. But the banks have a point - use a facility to spend money you don't have, and you'll pay for it. And so you should.

If you want to moan at someone, moan at those that used the courts to challenge huge charges before, when they could have avoided those charges in the first place by not going overdrawn. It's those court cases that've led to this. And this will be the result of the bank's very expensive and extensive teams of lawyers coming up with a way to basically do the same thing in a way that isn't subject to the same basis for a challenge.

[Biscuit]

And its ok for banks to charge mulitples of £30 for going £0.50 over your balance?

Your statement lacks scale completely, int he same way as their new 'scheme' does.

So basically they punish the people who slip up occationally and use their overdraft for emergencies and get lenient on the slackers who abuse the systems.... and you dont see anything wrong with that?
i only have a small overdraft in this account... much much lower than what is stated above and only tend to dip into it towards the end of the month meaning the interest for me is a couple of quid a month at the very worst, which im cool with because it makes my life a hell of a lot easier and less stressful.
Im gradually gettin a hold of my finanaces bit by bit but its difficult being a graduate with so much debt, regardless of which... i hear what your saying about it being easier going for those who go far into the blackest of black... but i dont, i use the facility as a safety net and thats all.

Yeha maybe other banks will start to change their policies to something similar but i refuse to believe they will all be as brutal as that.

[Whiternoise]

I think a percentage is more efficient, rather than charging a flat fee of £2, just nobble people with 1% a day. That way if you're only overdrawn 50p, you're effectively paying nothing. If you overdraw by a tenner, you're paying 10p a day. If you overdraw by £100 then you pay £1 a day.

I think most banks should allow something like a £10-20 safety net anyway because people always overdraw by fiddly amounts and end up paying the fees for it. But aside from that, if you overdraw without discussing it with your bank - expect to pay for it!

I got a small overdraft this year (student Natwest) for a couple of hundred pounds to deal with periods like holidays when i need to pay rent and i don't have any student finance to cover it.

[Saracen]

And its ok for banks to charge mulitples of £30 for going £0.50 over your balance?

Your statement lacks scale completely, int he same way as their new 'scheme' does.

So basically they punish the people who slip up occationally and use their overdraft for emergencies and get lenient on the slackers who abuse the systems.... and you dont see anything wrong with that?
i only have a small overdraft in this account... much much lower than what is stated above and only tend to dip into it towards the end of the month meaning the interest for me is a couple of quid a month at the very worst, which im cool with because it makes my life a hell of a lot easier and less stressful.
Im gradually gettin a hold of my finanaces bit by bit but its difficult being a graduate with so much debt, regardless of which... i hear what your saying about it being easier going for those who go far into the blackest of black... but i dont, i use the facility as a safety net and thats all.

Yeha maybe other banks will start to change their policies to something similar but i refuse to believe they will all be as brutal as that.

No, what I said doesn't lack scale, and nor do these new rules.

But first, where did I say that "multiples of £30 for going 50p over your balance" was OK? Please don't set up straw man arguments and expect me to justify something I didn't say. What I said was that if you use money you don't haver, you'll get charged for it, and so you should. You would under the old system and you will under the new system. Like any change, some will gain and some not. Those that don't, typically won't like it.

Personally, overdraft facilities don't affect me because I don't have one, haven't had one EVER, and on the one or two rare occasions when a mistake has resulted in charges, a word with the bank has resulted in them being removed. I did, however, on one occasion close an account with one bank over the way they dealt with a friend's charges, but that was due to a thoroughly rude and obnoxious manager rather than the actual charges. So, as someone not affected by the old or new charges, I don't have a horse in this race - I don't gain and I don't suffer from it.

And it scales. As a flat rate daily charge, it scales because the longer you leave it, the more expensive it is. It also scales because a facility over £2500 costs you more than one under, and an unapproved (or exceeded) facility attracts a punitive rate. So a smaller facility, used for a brief period, will be a lot cheaper than a bigger, or unapproved, facility used for a longer period.

And they're not "punishing" people who use an overdraft facility for emergencies. They're offering a service, and charging a fee for it, and moreover, it's one FAR easier to work out what it'll cost you. It's simple, one of three situations, for x days. If you use it towards the end of the month, then x will be fairly small, and so will the charge. But the choice is yours. Previously, the charges weren't anything like that predictable, which could result in much larger charges than people were expecting.

No change will suit everyone. It seems it doesn't suit you. But that doesn't mean it won't not suit everyone.

As for whether the other banks will be as brutal, well, it remains to be seen, doesn't it? If other banks are more lenient, I guess Halifax will lose a lot of overdraft-using customers. Given their recent financial woes, maybe that's part of their strategic planning to rebuild their balance sheet. After all, the new financial world is no longer about growth in the customer at any cost, and many institutions are retrenching. Maybe Halifax are.

[Saracen]

I think a percentage is more efficient, rather than charging a flat fee of £2, just nobble people with 1% a day. That way if you're only overdrawn 50p, you're effectively paying nothing. If you overdraw by a tenner, you're paying 10p a day. If you overdraw by £100 then you pay £1 a day.

Part of the issue is that the banks are having to face the investigation from the OFT into the way charges have worked in the past. Part of the reason why the original court case (and the High Court appeal) went against the banks was the complexity and the lack of transparency in the charges. The complexity of calculations, for instance, made it hard to compare what you'd pay at one bank with another. There's been a lot of discussions going on between the banks and the OFT, and if the Supreme Court upholds the High Court rejection of the banks appeals, then it's the OFT that gets to judge whether bank charges were unfair or not, and everything they've said so far strongly suggests that they will say yes.

The updated report form the OFT goes on extensively about charges having to be "reasonable" (because they hit legal problems if they aren't), but also about them being clear to understand to compare, and also easy to calculate so that people should not get unexpected charges.

That (IMHO) is what this change is all about. It makes charges clear, because it's basically now just one of three situations, and however many days you use a facility for, and the various sundry facility charges (which were different for different accounts) have gone, as have paid item charges, unpaid item charges, and so on.

That's one reason why I say I think you can expect something of this order from the other banks. It might vary in detail, but it will be MUCH simpler than before. That's not to say cheaper, and certainly not for everyone, but this certainly is simpler. And, of courses, if people can look at it and understand what it means for them, then they can decide they won't pay it and look elsewhere. You can't do that with a complex hierarchy of charges that you can't predict the cost of until after the event.

Some banks may indeed decide to offer a percentage, though it certainly won't be as simple as this. Others may decide to charge a monthly account charge, but then include a free overdraft facility at no extra daily charge. They may well end up being a wide variety of different schemes, but if they're all much simpler, then at least we, the consumers, can understand much more readily what we will pay if we use (or abuse) our accounts. And as long as they're simple, transparent, not too complex and "reasonable" (which is a very subjective term) they almost certainly won't be susceptible to another legal challenge like the last one.

[AledJ]

Well I will changing my direct debits to Nationwide in that case!!! Plus Nationwide are giving £50 and they do the work for you!!!

edit: hmmm when I logged in yesterday I had the message but seems to be an old offer. Very strange!

[kalniel]

A&L introduced a similarly simple scheme a while back. I think it makes a lot of sense really, especially for those who don't quite understand all things finance. In A&Ls case it's something like 50p a day, up to a maximum of something like £2.50 a month (might be £5), which is obviously a bit nicer than Halifax, but the point is it's much easier to understand a daily fixed charge than 2.8% daily interest plus fine etc.

[Zak33]

If you've got a small oversdraft for a couple of days, I'd RATHER be charged £2 per day, and NOT| get charged £30 for a snotty letter AND charges.

If you've got a £2500 overdraft, and you keep it like that for a whole year, you will pay 365x£2 = £730

Tbh that's not as bad an interest as some banks charge anyway.

[Biscuit]

No, what I said doesn't lack scale, and nor do these new rules.

But first, where did I say that "multiples of £30 for going 50p over your balance" was OK? Please don't set up straw man arguments and expect me to justify something I didn't say. What I said was that if you use money you don't haver, you'll get charged for it, and so you should. You would under the old system and you will under the new system. Like any change, some will gain and some not. Those that don't, typically won't like it.

Personally, overdraft facilities don't affect me because I don't have one, haven't had one EVER, and on the one or two rare occasions when a mistake has resulted in charges, a word with the bank has resulted in them being removed. I did, however, on one occasion close an account with one bank over the way they dealt with a friend's charges, but that was due to a thoroughly rude and obnoxious manager rather than the actual charges. So, as someone not affected by the old or new charges, I don't have a horse in this race - I don't gain and I don't suffer from it.

And it scales. As a flat rate daily charge, it scales because the longer you leave it, the more expensive it is. It also scales because a facility over £2500 costs you more than one under, and an unapproved (or exceeded) facility attracts a punitive rate. So a smaller facility, used for a brief period, will be a lot cheaper than a bigger, or unapproved, facility used for a longer period.

And they're not "punishing" people who use an overdraft facility for emergencies. They're offering a service, and charging a fee for it, and moreover, it's one FAR easier to work out what it'll cost you. It's simple, one of three situations, for x days. If you use it towards the end of the month, then x will be fairly small, and so will the charge. But the choice is yours. Previously, the charges weren't anything like that predictable, which could result in much larger charges than people were expecting.

No change will suit everyone. It seems it doesn't suit you. But that doesn't mean it won't not suit everyone.

As for whether the other banks will be as brutal, well, it remains to be seen, doesn't it? If other banks are more lenient, I guess Halifax will lose a lot of overdraft-using customers. Given their recent financial woes, maybe that's part of their strategic planning to rebuild their balance sheet. After all, the new financial world is no longer about growth in the customer at any cost, and many institutions are retrenching. Maybe Halifax are.

I understand they are offering a service and charging a fee for it, its the cost of the fee which i have a problem with as it is going to be exponentially worse than i was paying before. I personally think its worse that getting the occational £30 for going overr the limit in the scheme of things. I know banks have been through turmoil and they need to pull themselfs out but changing policies which benefit quite stupid customers doesnt sound like fair to me.

To me that isnt scale, it only really accounts for 2 kinds of people: people who live out of their overdraft and people who regualy go over their overdraft. It doesnt take int account vaying levels of money borrowed under 2500 - which is a big frickin jump and the only way to make this 'deal' worthwhile if your going to use it at all is to plunge right into it and use as much as possible if the fine is going to be so flat. That to me in a country with as big a population as we have and such a broad variety of trades/skills with a relative scale in income is not scale. Yes it has some form of crude scale whereby if you use it for longer you pay more but that was always the case, now they are just taking a lot more money off a lot more people a lot more regualy. Hardly a good bonus for truely understanding the system in my eyes.

I would much rather pay a flat rate to use my overdraft of a certain amount per month than have the worry if say for example my car breaks down halfway through a month when all my direct debits etc have gone out, i pay for the part and i have no money money to live off... i get charged £1 for every day i want to eat.

Fair enough this fee doesnt suit me and it may suit someone else, anyone here that person?

[oolon]

Personally I have a One account (Virgin One Mortgage), so have a killer overdraft facility allowing me to borrow and mortgage interest rates the full amount of the facility at any time with no charges. When i first got it I went to a bank machine and it told me I was £120,000 overdrawn! Ouch! I would like to point of its all payed off now, but I keep the account as its a great way that i could borrow money if I needed. However mostly I keep a Lloyds back vantage account topped up to the 4% level, which is more than enough for unexpected payments.

[Bunjiweb]

That sounds appauling. I have an account with Barclays and on a 2.5k overdraft I get charged barely anything, Very good banking service, customer service, have never had anything to grumble about and their online banking is excellent.

Ben