Overdraft Query

[snailrancher]

We approached our bank to find out their intentions regarding our overdraft which is due for review at the beginning of next month. They told us they are cancelling it completely. We have been given no warning of their intentions. If they cancel our overdraft, it will swallow up our salaries, and leave us with no money at all for bills, etc. Does anyone know if they are allowed to do this?

[factor-fiction]

Have a look at your terms and condition. If your current arrangement was due to expire I think they will have the right not to renew. It may be worth asking for a compromise- eg an extra 3 months while you sort out your affairs....or threaten to take your debts elsewhere!

[snailrancher]

Thanks factor30. We are going to talk to them tomorrow. All we could get through to tonight was a stupid call centre.

[Buenchico]

An overdraft can always be cancelled, and the outstanding amount 'called in', at any time. That's what makes it different to a bank loan. The bank may offer to substitute a loan for the overdraft but it's under no obligation to do so.

If your salaries are being paid into the account, it might make sense to open another account, with a different bank, to have your money paid into. That way your bank can't take all of your salary to pay off the overdraft. (They'd simply be left with a debt which you could offer to make reasonable payments to settle. If they failed to agree, all they could do would be to get a CCJ against you, which would simply order you to repay the debt at a rate which you could afford).

Chris

[sandmaster]

Overdrafts are repayable on demand. Ask for a loan to repay it over a period. This is probably what the bank is aiming for anyway. Avoid the loan repayment insurance.

[snailrancher]

Thank you all for your answers, which were very helpful. It's sorted out, but took several days, and three trips to our local branch!!

After telling us on the phone our overdraft had been completely cancelled, we then got a letter saying we'd got the full overdraft for another year!! Then a few days later we got another letter saying our request for an overdraft had been turned down, and our overdraft cancelled. My Husband went back into the branch, where they told him that the first letter had been sent in error, but as it was their mistake, they had to honour it, and therefore we do have the overdraft for another year. Don't you just love banks??!!