I am really not having a good time with banks at the moment.  If, like me, you do your personal banking faithfully with Halifax, you are probably about to be stiffed for a large sum of cash.  Halifax have decided that their existing charging structure is not right.  I expect they are pooing themselves because the whole charging system is going through the courts and should reach resolution by Christmas, hence their decision to change everything on 6th December this year.

They have decided that, instead of charging £35 per transaction made over your overdraft and a £28 fee which they refused to explain to me (they can no longer call it an “admin fee” due to legal limits on what can reasonably be charged for admin, particularly with an automated process where no admin is involved!!) they will instead be charging £1 per day that you are within your authorised overdraft and £5 per day for when you go over.  This means, that for someone who dips £10 into their overdraft for a day, they will be charged the equivalent of a 3,650% annual interest rate. Great!

Now I fully believe in taking responsibility for your actions.  I strongly agree that I should be charged if I go over my overdraft, but I think that the charges are not representative.  Surely there should be a sliding scale.  Electron cards can and will (in most cases?) be stopped if you go to a till and there are insufficient funds available.  Halifax will not implement this sytem for their cards.  As a result, I was almost charged, recently, £98 for going £4.20 over my overdraft in two transactions.  This is ludicrous and will not help me get out of debt.  If I had spent £300 in one transaction I would have been charged £63.  Do you see what I mean?  There should be a daily charge, or a sliding scale (£5 for going over by up to £10, £10 for up to £50 etc).

The thing that makes me angry about the new system is the lack of responsibility the banks are showing.  They have given us two months (at Christmas) to get out of our overdrafts.  An overdraft is simply supposed to be a buffer.  It is not something you are supposed to permanently exist within.  However the banks have actively and positively encouraged us to constantly extend our overdrafts beyond our means (as with credit limits).  The more debt you are in, the better your credit rating appears.  This makes no sense whatsoever and is irresponsible.  Whilst we should all take responsibility for our spending, it does not help when the salespeople that are bankers dangle the carrot.

I have a suggestion.  if your overdraft is out of control, the bank should say that they are going to reduce it by £100 per month, until it is a reasonable buffer rather than an extended credit agreement.  This is a much more realistic sum to expect people to pay back.  What if someone has a £2,500 overdraft (because believe it or not some banks offer it!)  and has 2 months to pay it back?  It is madness!  I am so glad that the rule doesn’t apply to the student account, as there would be a lot of students who have just left uni with massive debts (not a huge amount of jobs out there) who will really be up the creek!