Halifax is imposing a fee of £1 a day from arranged overdrafts of £0.01 to £1,999 as from 1st Dec 2015. No interest rate is charged.

So if one has an arranged overdraft of £100 and goes overdrawn by £0.10, a fee of £1 will be charged and by 100 days, this £0.10 becomes a unarranged overdraft for which a fee of £5.00 is faced.

Is this imposing excessive charges or treating customers unfairly??

Halifax is imposing a fee of £1 a day from arranged overdrafts of £0.01 to £1,999 as from 1st Dec 2015. No interest rate is charged.

Hasn't this been the case for a while now. Perhaps you've got the year mixed up?

So if one has an arranged overdraft of £100 and goes overdrawn by £0.10, a fee of £1 will be charged and by 100 days, this £0.10 becomes a unarranged overdraft for which a fee of £5.00 is faced.

Not true. There is a £10 buffer for which no charges are due.

Is this imposing excessive charges or treating customers unfairly??

It's subjective. Various consumer groups (I believe Which?, not necessarily CAG) lobbied for overdrafts to have a more transparent charging structure. I suppose the idea is that it's easier to know how much you will have to pay if it's a simple flat daily fee as opposed to calculating it using interest rates etc.

Bearing in mind these are to be applied to BASIC accounts, surely it is in the banks power to prevent overdrafts occurring?

With today's modern technology there should be no way an account can be allowed to go overdrawn (When on a Basic account with no facilities)

It should be simple/

No overdraft request formally requested previous to the payment to be made = Refusal to authorise transaction.

Unfortunately sabresheep it is possible even with a basic bank account. Point of example would be Tesco pay at pump. Tesco pre authorise yr card with a £1 debit, you can then spend up to £99 in fuel and it doesnt show as off your available balance until they request the full payment 2 to 3 days later.

So if u have £1 in your account you can in theory become up to £98 overdrawn, even on a basic account.

Been caught out a couple of times by this just by forgetting I'd filled up and then using my card for another transaction a day or two later.

A Valid point

But then the bank should only pay tesco that £1 and leave the debt with tesco

They (and everyone else) would soon change their tech to dispence pre paid amounts of fuel only Oh look, you just did away with drive offs at the same time

@StJane,

That £10 buffer was the result of my engaging with Halifax and the help of Sir Malcom Rifkind in 2012. Halifax then wanted to do the same.

That £10 buffer is being removed on 1st December 2015

@Sabresheep - the £1 a day fee applies arranged or agreed overdrafts with Halifax. The reason is for timing issues where you need to spend money or are charged early by direct debit (as Vodafone does at times) before money coming into your account clears or there is a delay in clearing.

If you do not have an agreed overdraft, the charge is £5 a day.

The point is the cost of the fee and not an interest charged for the "borrowed" money that has been agreed. The cost of processing the overdraft is very small, if this results in a net deficit for the bank's aggregate funds for the day - its interest cost for the day is the SONIA (Sterling Overnight Interest) which is near LIBOR and these are low, plus the charge for 1-day credit risk. Unless the charge for credit risk is very very high as done by Payday lenders, the total amount should not be even close to £1 a day for an arranged overdraft of £1.

The move is either punitive or an intent to move away from basic current account to one where you have to pay the bank to keep your money.

Its a handy tool if your skint sabre and you need a bit of petrol just before payday

However, you do hit on a point I am trying to make - it affects the poor more than the higher income stratas. There are at least three points emerging from this:

1. Why are they not charging interest instead of fees? The processing costs are much lower than £1 a day and even when added to the interest charge, still lower than £1 a day. Can there be any reasonable justification for a £1 charge on an overdraft of £0.01?

2. These fees are imposed on overdrafts that have been arranged and agreed with the bank on these basic current accounts; and not on negative balances in those current accounts that have not been agreed.

3. There is a possibility of these fees being imposed to move customers away from basic current accounts to one where customers are charged for maintaining their money with the bank (which derives liquidity it is required to have by the PRA to operate) and have the inefficiency of the charge hidden by all sorts of bells and whistles that can be better obtained at lower cost elsewhere, even such individually service costs are totalled.

Thread tidyed

Please remain on topic and remain civil

Regards

SS