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Overdraft repeat use FAQs

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Why have you contacted me about this and why now?

As a responsible lender, we review customers’ overdraft limits to make sure they’re meeting their short-term borrowing needs. If we see that an overdraft is being used regularly, we’ll get in touch. We will contact you to make you aware you may be incurring high and avoidable costs and also that there may be a cheaper borrowing option available instead of using your overdraft.

 

What do you mean by ‘overdraft repeat use’?

Overdraft repeat use is a description that refers to the frequent use, value and reliance of an overdraft that may cause avoidable charges.

I’ve received a letter about overdraft repeat use. Why is this?

The aim of these are to provide support, as well as to help you save money. This is why we’ve contacted you.

When we first contact you to tell you you’re using the overdraft repeatedly, it’s to explain that your pattern of overdraft use may be resulting in high and avoidable costs. As a general rule, the longer you use your overdraft the more it will cost overall. By reducing overdraft use, you could save money. We’re also providing information to help you review your monthly commitments, as well as let you know where you can get free and impartial help if you ever need it.

How many of these letters/communications will I receive?

We’ll usually contact you 3 times, but we may contact you at others times too. After the initial letter is sent, a further letter will be sent at 6 and 12 months.

 

What do I need to do so I am no longer considered in repeat use?

To no longer be considered in repeat use, you’ll need to reduce your overdraft use. So you know how you’re progressing, we’ll send a further communication 6 months after the initial letter to let you know how you’re getting on. This will confirm that you are either:

  • no longer considered in repeat use
  • still considered in repeat use

Why does it matter if I'm in overdraft repeat use?

Overdrafts are designed for short-term lending. Using an overdraft on a more long-term basis may not be cost effective and could mean it takes you longer to clear your outstanding balance. This will cost you more in the long run.

Why are you writing to some customers about this, but not others? My friend/family member has an overdraft facility with you but hasn't received a letter about this.

We’re only writing to customers who are categorised as in repeat use. It may be that your friend/family member hasn’t used their overdraft facility repeatedly. If they’re in a similar situation, then we’ll write to them at the appropriate time.

Does this mean that customers who aren't in repeat use aren't entitled to any support?

A lot of the information we’re providing could be useful, whether you’re in repeat use or not. For example, any overdraft user can benefit from reviewing their pattern of use and looking at what they pay in interest. All customers can ask for support with their financial concerns.

Have I done anything wrong?

Under your overdraft terms and conditions if you have remained within your overdraft limit, you haven’t done anything wrong. However, you may be paying more than you need to in interest, which is why we’re letting you know and encouraging you to review and reduce your overdraft usage. 

How can you make these changes to my account when I've already signed my agreement and kept to it?

There’s no change to what you have to pay under your overdraft agreement. Whilst we’re encouraging you to reduce the use of your overdraft if you can, it’s up to you to decide if you want to do this.

If you decide not to change the way you use your overdraft, there are certain steps we may take. This could include reducing, suspending or removing your overdraft facility. We issued a Notice of Variance to the agreement in November 2019.

We’ve also updated the Personal Banking Terms and Conditions and Charges’ - effective from 17 November 2019, to reflect the changes

Helping you manage your finances

We'll keep an eye on your account and how you're using your overdraft for signs you might be struggling to make payment. If we think you are, we'll get in touch to explain the different ways you can get help, including how we can help you.

What's the best way to reduce repeated use of my overdraft?

There are different ways to reduce repeated overdraft use. Some examples are:

  • review your monthly commitments - this can help you to reduce or remove unnecessary expenditure
  • reduce the number of days each month you use your overdraft - this can make a difference, even if only a few days
  • create a budget that looks at your earning and spending to help you identify where your money is going and where you may want to make changes
  • reducing your overdraft by transferring funds in from any other accounts you may have
  • have a look at other borrowing options that could meet your long-term borrowing needs - this may help to reduce your monthly interest charges
  • if you need further support reducing your overdraft usage, contact our specialist team on 03450 307263. The team can look at options to help you avoid repeat overdraft use.

 

Are there any ways to help me manage my finances?

There are a number of ways you can look to reduce spending or increase your income. Some examples are:

  • reviewing your tax codes to ensure you are paying the right tax. Visit gov.uk/guidance/hmrc-tools-and-calculators
  • checking you’re receiving all the benefits that you’re entitled to. Visit gov.uk/benefits-calculators
  • checking for any tax credits you might qualify for. Visit gov.uk/tax-credits-calculator
  • reviewing your utility bills. You may be able to make big savings by switching  provider or just changing tariffs. There are lots of different comparison websites that can help you find the best deal.
  • reviewing all your borrowing. Ask yourself if you have the right products to meet your needs.

You can also keep a track of your spending:

  • through the mobile banking app
  • through the online banking
  • by setting up text alerts

What are the other products which offer better interest rates?

Depending on how you use your overdraft, there may be cheaper ways to borrow over a longer term. There are certain benefits and considerations to taking out a personal loan or a credit card

Will you stop me from using my overdraft?

If you’re in repeat use over 2 consecutive 6-month periods, we may have to stop further spending on your overdraft. This may happen if you can’t (or choose not to) reduce your overdraft use.

Where can I get help if I'm worried about my finances?

If you feel you’re not in a position to reduce the usage of the overdraft, or are worried about your finances in general you can find more help at:

You can get independent help and advice from free and impartial organisations, some of which are listed below.

Citizens Advice

03444 111 444

citizensadvice.org.uk

Advice UK

0300 777 0107

adviceuk.org.uk

National Debtline (if you’re self-employed)

0808 808 4000

nationaldebtline.co.uk

StepChange Debt Charity

0800 138 1111

stepchange.org

Money Advice Service

0800 138 7777

Moneyadviceservice.org.uk

How much will the debt advisory agencies charge me?

The agencies mentioned above offer support free of charge. There may be other service providers in the market who charge for this service. Make sure you check when contacting them.

 

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