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Halifax overdraft charges - Ask our expert

On the subject of Halifax’s overdraft charges, our expert says...

To answer your main question, yes, unfortunately the changes that Halifax has made to its overdraft charging structure are legal.

Halifax states in its current account terms and conditions that it can change the conditions that apply to any service or account at any time, as long as it gives customers more than 30 days notice of the changes.

However, just because the changes are legal, doesn’t make them any easier to cope with. I’ve outlined your options below.

Option 1 – Switch to a different bank

Though Halifax claims its new charges are “simpler”, in reality they’ll mean some customers will face higher charges.

Consumer champion Which? advises anyone who is unhappy with the change in fees to “vote with their feet” and switch to a current account with another bank that better suits them.

Several banks offer deals for people with outstanding overdrafts, as long as you pay a certain amount into your account each month.

For example, if you can pay £500 into an account each month, you could switch to the Alliance & Leicester Premier Direct Current Account (www.alliance-leicester.co.uk). With this account you could get a 0% interest-free overdraft for 12 months up to £2,000.

If you can pay £1000 into an account each month, you could switch to Abbey’s preferred overdraft rate Bank Account (www.abbey.com). With this account you could get a 0% interest-free overdraft for 12 months up to £5,000.

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As you are unemployed Paul, I understand that switching to another account that requires these levels of income may be problematic. It’s worth speaking to a couple of other banks though, to see whether they could offer you a better deal than Halifax.

Option 2 – Speak to Halifax

If you don’t think you will be able to cope with the new charges, or are just concerned about how the changes may adversely affect you, it is a good idea to talk to Halifax to see if it can offer you a solution.

If you are in financial difficulty, this is especially important. You can talk to a Halifax adviser by visiting your local branch or by calling the helpline on 0845 603 9055.

Halifax has a dedicated website (www.yournewhalifaxcurrentaccount.co.uk/hica) explaining the changes. It also offers suggestions of how it may be able to help customers cope with the increased charges.

Finding a satisfactory solution will depend on your personal circumstances and what Halifax can offer you. It says its advisers may be able to help customers reduce the fees they’ll pay by doing one or more following:

• Using savings to repay or reduce their overdraft
• Plan to reduce their overdraft every month, say by £50 a month
• Changing the dates of their largest direct debits/standing orders to reduce the number of days they use an overdraft
• Opening a second (bills/spending money) account, if it will make managing their finances easier
• Registering for online/telephone banking so they can keep a closer eye on their balance
• Consolidating their overdraft and any other borrowing with a personal loan to pay off or reduce their overdraft
• Offering customers a 0% credit card as an alternative, if they plan to repay the balance every month

Option 3 – Seek professional advice

Whether or not you are able to switch current accounts or find a solution with Halifax, if you are struggling with debts it is crucial you seek help. There are several debt charities you can contact for free, impartial advice:

• The Citizens Advice Bureau (www.citizensadvice.org.uk) offers confidential advice by phone and face-to-face. Visit the website to find your local CAB
• The National Debtline (www.nationaldebtline.co.uk) provides information and resources for coping with debt on their website as well as a helpline on 0808 808 4000
• The Consumer Credit Counselling Service (www.cccs.co.uk) offers advice, support and counselling for anyone who is worried about debt. You can call the helpline free on 0800 138 1111.

Advisers from these charities can help you explore all your options and can offer you advice tailored to your specific circumstances.

Ask Chris a question

If you have an money query please email OurExpert@CreditChoices.co.uk

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