I received a letter in the post from the Halifax yesterday informing me of changes to my Current Account T&C's. I think it will be be worthwhile exercise to make as many people as possible aware of what the Halifax is up too & to find out whether the other banks are following suit. Hence this post.
Some background information to begin with. I consider myself to be very careful & organised financially. I currently have an Arranged Overdraft Facility of £1,500, which I use sparingly from time to time, for only a few days at a time. I currently get charged interest on the amount that I use, for the number of days I am overdrawn. To date the highest amount of interest I have had to pay for a single month is 78p.
The new T&C's I received today say:
"From 6th December 2009 we'll no longer be paying the 0.1% AER/gross credit interest we pay you on the balance in your account, or charging you debit interest on any overdraft you use. Instead, we're introducing new, simple and easy to manage overdraft fees."
"At Halifax we're committed to fees that are clear and simple to understand. From 6th December 2009 we'll charge the following daily fees:
- If you use an arranged overdraft up to £2,500, we'll charge you £1 a day
- If you use an arranged overdraft over £2,500, we'll charge you £2 a day
- If you use an unarranged overdraft, we'll charge you £5 a day
- We won't charge you any interest on an overdraft, whether it's arranged or unarranged
This means there will be no additional fees to pay if you use an overdraft. These fees make it easy to calculate what your overdraft will cost you each month you use it."
So under the guise of supposedly making it easier for customers to understand their fees, the Halifax Bank will:
(1) Stopped paying interest on these Current Accounts, and
(2) Instead of charging interest on the actual amount arranged to be borrow, will charge a flat daily fee. This in effect is purposely designed to penalize the vast majority of the Halifax’s careful & diligent customers, using a vastly inflated 'disguised' annual interest rate.
These proposed new arrangements mean for an Account Holder with an arranged overdraft facility, who receives & checks their bank accounts using their monthly statements(N.B. Many people still receive quarterly statements), if they mistakenly or unknowingly go JUST 1 pence overdrawn one day after receiving a statement, could potentially pay £30 in bank 'fees' in a month for that oversight!
The Banks know of & to some extent are reliant on ‘customer inertia’to keep their chosen business models running. The Halifax of course knows about & can quantify the many 10’s of thousands of its customers that sometimes mistakenly go into an Unauthorized Overdraft for a variety of reasons. This type of oversight is commonplace & is easily identifiable/measurable phenomena within the Retail Banking Industry. Which is exactly why this new policy is outrageous & grossly unfair. The move to flat rate fees has been deliberately designed to 'hide' the true size of the punitive annual interest rates being applied to these accounts.
For an Account Holder without an arranged overdraft facility, whom receives & checks their account using their monthly statements, if they mistakenly or unknowingly go just 1 pence overdrawn, for whatever reason, one day after receiving their statement, may have to pay up to a mind-boggling £150 in bank fees for just 1 month! If this account holder was just 1p overdrawn for a year, without an arranged overdraft facility they would be liable for a horrendous £1,825 in fee for the year i.e. with the equivalent Annual Interest Rate at 182,500%.
Isn’t the Bank Charges case currently going through the courts meant to be addressing exactly this type of ‘unfair’ charge? Clearly these changes have been deliberately designed as a money-making exercise, but are a very crude & under-hand attempt by HBOS to dig its way out of a hole of its own making, by exploiting its customers in whichever way possible. Even as a very deliberate attempt to raise money, I still find it hard to believe that the HBOS’ Management Team has thoroughly thought through all the implications of these changes. In light of the banking crisis, this won’t be the first time!
With the introduction of these crudely ‘disguised’ punitive Annual Interest Rates of up to ridiculous 182,500%, it would seem that HBOS are now entering the Loan Sharking Business! What makes these actions by HBOS even more unacceptable, is the fact that it is one of the banks that has been bailed-out by tax payers & is now partially public owned, as part of the Lloyds Group. After the Banking Crisis & Bank Bail-out, we the general public, should no longer just stand idlely by & let the Banks get away with such blatant excess & exploitation. I have lodged an official complaint with the Halifax & contacted the Parliamentary Treasury Select Committee about this matter.
After the Banking Crisis & Bank Bail-out, we the general public, should no longer just stand idlely by & let the Banks get away with such blatant excess & exploitation. I have lodged an official complaint with the Halifax & contacted the Parliamentary Treasury Select Committee about this matter.
After the Banking Crisis & Bank Bail-out, we the general public, should no longer just stand idlely by & let the Banks get away with such blatant excess & exploitation. I have lodged an official complaint with the Halifax & contacted the Parliamentary Treasury Select Committee about this matter.Please let me know what the other Banks are up too & if you have any suggestions about other actions that can be taken against this type of banking exploitation.
Thanks