What is an unarranged overdraft?

[mike84]

Anything over your agreed overdraft limit (even a few pence) will be 'unarranged' and they will charge you the £5 per day. Interestingly with the Halifax, I believe they now charge £1 per day to be within your arranged overdraft. Seems that would work out at a very high interest rate if you regularly use your overdraf facility.

[chimay]

Have you got an 'arranged' overdraft already? If you haven't, get one sorted, just in case of emergency. The amount they charge you on an arranged overdraft is quite low. Unarranged and they beat you to death with the charges.

 

We've got an arranged overdraft which doesn't have a charge on it unless we go over the limit. Periodically the bank wants us to up the limit but we don't. Our creditcard company upped our limit without asking or evening telling us. We are quite well organised with our money so we've never used the credit card to its limit. The interest rates scare the life out of me.

[bloom1961]

I was with Halifax as soon as they brought in this new overdraft thing I left them a right rip off

[HeadingNorth]

If you mess up your finances, and a direct debit falls due when you don't have enough money to pay it, one of two things can happen.

 

One: your bank refuses the direct debit, and charges you a whomping great fee for turning it down.

 

Or two: the bank allows you an unarranged overdraft in order to pay it, and charges you a whomping great fee for going overdrawn without prior arrangement.

 

 

The chances are that you will end up charged less in the second event than you would in the first. In either case you'll be charged far more than is legally allowable to cover the bank's costs, but for some reason, the banks still get away with this.

[epiphany]

So HBOS is still winning the trust of consumers? Oh dear. Must have been their excellent advertising campaign.

[Lockjaw]

no its halifax... i just dont want to go in to it as it charges £5 a day...just wanted to know that if a go and take cash from the cash machine that i cant go in to a unarranged overdraft.im aways on top of things when it comes to my bankin but i just cant get my head around this one!

 

Hi Leosmum.

 

I did some rough calculations and provided opinions on this account here.

 

The main points are as follows:

 

 

Here's some more info on the Halifax's exploitative new charging structure. I make no claims regarding the neutrality or otherwise of these sources.

 

Their own explanation of the new system is here.

 

Bear in mind that this is not their only current account. It is, however, the one most likely to be held by customers with lower credit ratings and, therefore, most likely to be incurring charges.

 

Also, bear in mind this example.

 

I've done a rough calculation and estimate that, previously, a customer £750 overdrawn for a full month would expect to pay around 8 quid in interest. They will now pay 31 quid in charges. If, previously, they managed to reduce the overdraft that month they would pay less interest. Now they will pay £31 in charges.

 

Obviously, the larger your overdraft the smaller the differential but, by my quick, and quite possibly flawed, calculation, I don't think anyone, even with the full £2500 OD will be better off.

 

 

Here is a link to an article reporting on the new fee system.

 

Finally here is a thread on the Consumer Action Group site discussing the new fees. As is usual on this site, the thread contains a large number of whingeing or panicking posts interspersed with some well thought out points and valuable suggestions.

 

Having looked further into this, I would recommend that anyone with this account shifts ... quickly.

 

[Grandad.Malky]

Fools and their money are soon parted.

 

If you spend money you haven’t got its no good blaming the nasty bank.

[Rupert_Baehr]

An 'unarranged' overdraft is where you take their money (without their specific permission) and you spend it.

 

If you take my money without my permission I will ensure that you are prosecuted for theft.

 

Banks are slightly more generous ... or are they?

 

If I prosecute you successfully, I could use the conviction as evidence that you owe me money and I could get a court order against you. If you don't have any money, that wouldn't do me a lot of good.

 

The banks, however, can charge you usurious rates of interest and if you don't like it, they can make it almost impossible for you to get your hands on their money again.

 

Be smart: Spend your own money - Don't try to spend theirs.

 

If you want something and you don't have money - do without until you do have money.

 

Or join the Green Party.

[hitman2010]

why take the overdraft if you didn't know how it works if you have an overdraft of 100 anything exceeded above that limit is unarranged read the terms and conditions and the banking code all banks provide this common sense really.

[rubydazzler]

I agree with everything that jacksrake has said about the Halifax and their latest way of extracting as much from those least able to afford it as they can. But all banks are bad, some are just worse than others. The Halifax is now beyond bad and Barclaycard with their so called Personal Reserve are even worse!

 

If you have any 'loose' savings, use them to pay off an arranged overdraft, which is no longer a reasonable way of 'borrowing' a little of someone else's money for a while. £1 a day for being even 20p overdrawn!

 

It's so easy to get into the habit of having a bit put by for emergencies, but always being a little bit overdrawn, not fully paying off your credit cards at the end of the month etc. Then you suddenly get a wake up call and realise how much they're sucking out of you every month.

 

I've recently rejigged my finances and although I now have no savings, I'm about £200 a month better off. I'm shocked at how much I've wasted over the last few years just by not taking the trouble to take a look at my budget.