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bainbridge

bainbridge

bainbridge

Soldato
Joined
9 Dec 2009
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5,364
Location
Bristol
Hi GD

I knew the gf was overdrawn on her current account but recently she admitted it was 5k and she hits her limit every month.

So we went to the bank to try and sort it out. The best they could offer was a 5k consolidation loan at 15.9%.

I was disappointed that they didn't offer a better rate and said so, adding she'd been with them for 20 years, has no other debt and has had her overdraft hiked up at every request without them asking for a review. Their response was they're taking a risk based approach.

Now, the gf was a victim of identity fraud a few months ago and although no money was stolen she had to join a thing called ICAS and has to produce ID when asking for credit. The application we made at her branch was flagged as potential fraud and had to be cleared by their fraud team. I suspect that this might make an online application with another lender problematic, plus she's already applied for one loan today and I don't want her credit score to be badly affected.

I'm quite angry that her bank are only offering to change the 19.9% in overdraft charges to a 15.9%. I don't work for a bank but do work for an FCA regulated company so am aware of the rules around fair treatment of customers and the complaints process of an FCA regulated firm. I'm tempted to make a complaint about the rate offered and if they don't offer a better rate as a resolution escalate the complaint as formal, and if their final response isn't satisfactory then go to FOS. On the other hand there's no guarantee they'll offer a better rate and because of the fraud marker I'm worried other providers might not offer anything if her bank turns its back on her.

My gf created this situation, but I want to help her get herself back on track so any constructive comments will be appreciated.

Thanks

 
Can you not take the loan out?
Halifax's loan calculator would give me about 5K at 9.9% for 4 years.

Frankly though, I do appreciate the banks position.
 
Get on a credit score website. Noddle is pretty good and see what her credit score is.

I wouldnt recommend getting into additional debt but there is no harm in replacing existing debt with cheaper debt.

A loan or credit card with no interest but a small transfer will probably be the most appropriate if her credit history allows.
 
I doubt you'll get anywhere with FOS. From what you said the bank has done nothing wrong - they've responded to her requests to increase the overdraft and now it has reached a certain point they've made a concession and already offered a better rate.

If they've applied high transaction charges for transactions outside the overdraft then you may be able to claim some of these back. Otherwise you could consider switching banks to one with a lower overdraft rate or consider a 0% interest credit card and transfer the debt to that. Also consider shopping around for loans - 15.9% is very high.

Don't lend her the cash...
 
I would suggest applying for a money transfer credit card. MBNA are currently offering 0% for 38 months with a 3.45% fee which works out cheaper than all personal loans on the market. Generally its easier to get the quoted rate and interest free period on a credit card application as opposed to a loan when you're credit rating isn't tip top.

Your girlfriend will need to ensure she makes at least the minimum payment every month and doesn't use it for other spending in order to benefit from the 0% rate. That is easily managed however by cutting up the card as soon as you receive it and setting up a direct debit payment for £132/month (so the £5k is fully paid off after the 38 months).

The best money transfer cards at the moment are listed here https://www.moneysupermarket.com/credit-cards/money-transfer/.
 
Thanks for the responses both.

Any ideas on how this fraud marker will affect online loan applications? Either a loan with a better rate or a credit card with an interest free period will be a better deal but I fear they'll just skim off the easy acceptance cases and decline the ones marked as potential fraud.
 
The bank is far from weary. It will be salivating at the prospect of consolidating that overdraft into a bank loan so that the overdraft can be run up again!
 
From the bank's point of view, she can't manage her money. Regular increases in extending her overdraft and now asking essentially for another 5k on top even though it's to clear the debt, that level of credit is still available to her and with the history you've told us she's at risk of not managing it again properly. If she's hitting her limit every month I'm assuming that the fees are roughly £60 a month, even getting a loan at 6.9% over 4 years would need a repayment of £120 a month, at 15.9% it's £140 a month. If she can show she can save £60/80 a month regularly and not go over a personal set limit it might be worth looking into getting a loan in the future. If the saving is erratic but potentially over £100 some months it might be cheaper just managing the overdraft long term and reducing it. Get further away from the limit and you will be offered a better rate.

You will need to go over all her spending and see where cuts can be made and how to manage it better, it's useless applying for a loan if she's struggling to get the overdraft away from the limit now.
 
No, from the point of view of the bank she can manage her money, but only badly. The bank don’t especially care about lending her money so long as she keeps up with the interest, that’s their income after all. It’s only a problem when you can’t make the payments.

Remember, if you owe the bank £10k and can’t pay it’s your problem. It’s not until you owe £10m and can’t pay that it’s their problem.
 
Yea, if the bank were that worried about her being a risk, why did they extended her overdraft to 5k in the first place...

The_Abyss said:
The bank is far from weary. It will be salivating at the prospect of consolidating that overdraft into a bank loan so that the overdraft can be run up again!
Click to expand...

Precisely, and unfortunately I know more than one person who has done this, with the bank far from being responsible and restricting their credit but facilitating their bad behaviour
 
From what I understand she's struggling to pay but does manage to each month, albeit with occasional increases to the limit? From the bank's point of view she is a risk but is still paying. So they wouldn't want to lower the rate too far. They need to make a profit on the loan early, in case she defaults later into the term.

I'm not sure what you would make a complaint about? A bank has looked at the risk involved and decided that's the rate they wish to offer.

I know you said you won't take out the loan for her but I also want to highly recommend that you really don't. If she was your wife then it may be a different situation. But if you take out a loan then she will be able to run up her own debt again, alongside the loan in your name. Then the pair of you would simply owe more and more money. If you split up then you would be left with the loan. Additionally it's far better for her to learn to get this under control while the amount is relatively small. Once it grows then it's harder to pay back.
 
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For a loan you could try Zopa. Interest rates have been raise by the BoE so loan rates will be going up everywhere, but provided she doesn't have a terrible history, something in the in the region of 5-10% shouldn't be hard.

If/when she gets a loan, have her close the overdraft, or switch to an account without one, so she can't run it up again.

BUT first.

Do not apply for anything until she has an idea of her credit history.

Noddle (checks callcredit), Clearscore (checks equifax), and the credit club - checks experian (https://www.moneysavingexpert.com/creditclub) are all free.

Then if all is ok, do soft searches only to check eligibility for loans or 0% credit cards.
 
weringo said:
I would suggest applying for a money transfer credit card. MBNA are currently offering 0% for 38 months with a 3.45% fee which works out cheaper than all personal loans on the market. Generally its easier to get the quoted rate and interest free period on a credit card application as opposed to a loan when you're credit rating isn't tip top.

Your girlfriend will need to ensure she makes at least the minimum payment every month and doesn't use it for other spending in order to benefit from the 0% rate. That is easily managed however by cutting up the card as soon as you receive it and setting up a direct debit payment for £132/month (so the £5k is fully paid off after the 38 months).

The best money transfer cards at the moment are listed here https://www.moneysupermarket.com/credit-cards/money-transfer/.
Click to expand...

Agree with Weringo here, this is what I did when I needed it. Transferred the cash and never used it apart from paying off the monthly payments, cancelled it with a clear balance about 2 months ago.
 
She has a good credit score but this fraud marker throws up problems, especially with online purchases so I expect loan applications online will set alarms off.

I might get her to accept the higher rate and then renegotiate the loan in a couple of years.
 
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