Monthly interest on overdraft - can I claim?

[loobertthefruitbat]

Hi

I am thinking of going to the Financial Ombudsman about my overdraft. Natwest have increased it several times since 2005 of their own accord (I didn't request this). It is now very substantial - £5000 and we pay a fair old whack in interest each month. I have just worked out that since the first increase (that wasn't requested) we have paid £2148.97 in interest.

I think that I have a case as they have broken the banking code which states "before we lend anyone money or increase an overdraft or other borrowing, we will assess whether we feel the customer will be able to repay it" - I have a letter from them stating that one of the increases was to stop us incurring charges, so it must have been obvious to them that we were/are having financial difficulties. The manager was also aware that for a period of this time I was unemployed following the birth of our daughter.

I think that because my husbands wages were paid into my account and they could see a regular amount going in, they thought that it would be a good way of making money out of us - especially as I had tried to get a loan to pay off the damn overdraft when it was at a much more manageable level & they refused me!

The problem is my husband has now lost his job and I only work part-time - there is no way we can carry on paying the interest as it is. I know that it is my own fault, for letting it drag on but I was suffering from severe post natal depression and just couldn't face up to it. I do think that Natwest are guilty of irresponsible lending and have encouraged us deeper into debt.

Does anyone have any advice? I would be really grateful. Thx

[Amy]

Re: Monthly interest on overdraft - can I claim?

Hi (love your username) do you have charges to reclaim on this account? If yes, this would be a good starting point and maybe to transfer any future income into another account.

You could then write to them with regard to paying off the overdraft and ask them if they would freeze the interest that is accruing.

[loobertthefruitbat]

Re: Monthly interest on overdraft - can I claim?

Thanks so much for your reply Amy (are those your legs? if so I'm very jealous!!).

I have got a bank charges claim currently on hold with the FOS, I was thinking of asking them to consider it under the financial hardship ruling. However the amount I am claiming back wouldn't clear the overdraft. Can Natwest offset the charges against the overdraft as this would still leave me with an approx £2600 overdraft, which I don't feel that I should be liable for.

I was hoping that if I got the overdraft sorted, I could still claim financial hardship and then get them to re-consider the charges.

[Amy]

Re: Monthly interest on overdraft - can I claim?

Yes, they can offset it. How much in charges are you claiming?

[argentarius]

Re: Monthly interest on overdraft - can I claim?

Without wishing to sound harsh, although £5,000 is a lot of money, it isn't unfeasible for someone working to repay this level of overdraft over a period of time.

By increasing the overdraft limit, the bank have indeed reduced the level of unauthorised overdraft charges incurred. The act of increasing the overdraft limit didn't in itself cause you to spend more money - that was your own personal responsibility.

It is far harder for you to claim that the lending was irresponsible when you had a regular income at every point the overdraft limit was increased, and when the bank can claim that the overdraft was increased to reduce the level of charges incurred. You could also have chosen to decline any increase in overdraft limit when it was offered.

The fact that your circumstances have now changed, due to your husband losing his job, doesn't render the original overdraft lending decision wrong. Hindsight doesn't come into it.

As Amy says, they will (correctly) credit any fee refund to the account and hence offset it against the overdraft.

By all means ask the bank to freeze the interest on the overdraft. They may refuse to do so.

You may gather that I don't agree with your assessment of your lack of liability for the £2,600 (or any part of the overdraft balance). But I wish your husband good luck with finding a new job and you jointly good luck with resolving your debt situation.

[loobertthefruitbat]

Re: Monthly interest on overdraft - can I claim?

Hi the charges + interest total £2382.14 (if of course I can get them back).

Thank you both for your comments. I appreciate what you are saying. I will speak to the bank & see if I can freeze the interest so I can try to make token payments back. I do still feel that the bank has been irresponsible. But I did spend the money as you say. What a plank I am, I've just stuck my head in the ground and let it carry on & now I'm in the mire! Oh poo!

[enaid]

Re: Monthly interest on overdraft - can I claim?

You are far from being on your own looby (I hope I may call you that) in this situation they do increase your OD, but they do inform you and do give you the chance to decline the offer of a larger OD. We all do it though, think, "oh I'll leave that alone, but it will come in handy just in case". Next thing it's all gone and your OD never goes down.
Wish you the best of luck and hope all goes right for you Enaid x

[Paule]

Re: Monthly interest on overdraft - can I claim?

As Amy has said previously, get another bank account set up.
Nationwide do a Flex account, which I would recommend as its what I have.
you get a cash card, you can set up Stnading Orders Direct debits and their internet banking is very good.

Then get ALL your income going into there, so that its isnt swallowed up by charges and interest.

Also is this the only financial problem that you have or do these charges bump other payments out, ie are you in arrears with other creditors like utilities, cards, loans etc.
If you are I would advise you to fill out an income expenditure sheet, then that way you can tackle everything at once, rather than bouncing from one debt to another.

If its only the bank thats the problem, then ok, if not let me know and ile post up the link the the I/E chart. If nothing else the IE chart will show you were all you money goes to

PKea

[Paule]

Re: Monthly interest on overdraft - can I claim?

Heres the Link to the Income Expenditure Sheets

Legal Beagles

If you dont want to post details on the forum feel free to send it to one of the team members.

[loobertthefruitbat]

Re: Monthly interest on overdraft - can I claim?

Thanks very much - the bank is the only problem really. We pay all our other debts - not in arrears on anything. I just haven't been able to make in road into the OD. I had just made changes, ie cancelled Sky, cancelled phone contract, changed utility supplier etc etc in an effort to spend less a month and try to start paying it off. Then my hubby lost his job. That's just our luck!

I will get a new account opened.