Overdraft overhaul!

[kevh_uk]

3 days ago i decided to check my HSBC account balance because i hadn't done it for a while and just wanted to ensure that the �300 rent that was going out the next day was indeed available...to my suprise instead of having the �650 of my overdraft available i only had �150.  After the initial shock i realised that they must have lowered my overdraft limit by �500 from �2000 to �1500.

I called them up and cancelled the standing order for my rent (casing me trouble in itself) and asked why it had happened...they told me that when i extended my overdraft back in september from �1500 to �2000 i would have been told that it was only conditional and would be up for review in january (i would have thought i would have remembered something important like that but hey....).  She said it would be no problem to extend it but i'd have to apply or it again...so i went through answering all her questions and she said i'd be told in a phone call in the next 2 days.

Got the dreaded call yesterday telling me that they wouldn't extend it again because in order for them to extend it i would have to be earning �2000 a month to cover it...this to me doesn't seem to make any sense at all....especially since i only graduated in July and it's a graduate account! I only earn �1000 a month after tax and now i'm �500 out of pocket...

Any suggestions as to what i should do? Should i change bank and hope they offer me a better deal or try and scrimp EXCEEDINGLY this month and by february have paid �500 of my overdraft off...

[willow74]

If they only reduced it this month then it wont go down by another �500 for quite some time. I wouldn't change banks cos you do have a relationship with them now.  Perhaps write a nice letter to your branch manager asking him/her to look into your account further.

[stevie21]

I wouldn't write a letter to anyone just yet. If someone's taken the time to look at your account, make a decision and have someone call you then I'd be surprised if the decision changed. It might be that an underwriter has looked at your account and they all but have the final decision.

The sad fact is that you're earning �1K a month but had an overdraft of �2000. You can't afford to maintain this. If you suddenly lost your income then that's 2 full month's wages and that's much too high (in the Bank of Stevie). Your OD limit should be about 75% of your income, not 200%.

As a short term measure, you could "switch" bank accounts to another bank. They'll move over any Direct Debits etc. and if you show them 3 months' statements which indicate an OD limit of �2000 they might offer to match this. I would only do this as a short term measure though and ultimately be VERY disciplined and reduce your OD limit because it's *too high*
Perhaps if you initiate this and show HSBC your account offer from, say, Lloyds - they might put your OD back up (temporarily!!!!!!!! Am I stressing this point enough?).
OR - if you're a graduate and you're in some kind of career progress scheme where you're guaranteed wage rises after certain landmarks (passing exams, length of service) then tell the bank that you'll soon be earning more & want that to be taken into account.

Best of luck.

[Oneeyedvic]

If you go to Halifax with your bank statements, proof of id etc, if you have clear credit searches and a salary of over �1000 being paid in, they will transfer you account over to them and match your current limit (�2000). As this takes time, while they are doing this they will also give you a �1000 overdraft limit with no interest.

 

I would suggest you take advantage of this, and start trying to clear your overdraft immeadiately. As Stevie says, you really should not USE such a limit.  Personally, I have a �6000 limit over 2 accounts, with a salsry of around �1500. BUT it is there strictly for emergencies. I have a balance of around �0 at the end of the month.

[Ammy]

By the way Natwest will give you an interst-free OD of �2000 with a graduate account. The good thing about it is that it reduces it every year. ie �2000 in the first year after graduation, �1000 in the second year and �500 in the third year.So you won't pay interest for a few years.

 

Strangely enough I was only getting �1000 a month after tax when I applied for it, but it seems that was fine.