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Sheer Heart Attack

Overdraft Armageddon

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Guest anorthosite

I doubt they would if you've got a mortgage with them, especially if there's a wiff of negative equity. The last thing they want is for you to default - they want you to keep paying up!

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Even though I was a teenager during the 90s crash and recession, I remember big stories about the banks pulling the rugs from under people and businesses that lived on overdrafts.

How far are we away from that now?

The carnage would be all-encompassing. For the skint or the spendthrift for whom the overdraft is a lifeline with which they can buy food or pay the rent/mortgage, it could trigger 30s style poverty and accelerate repossessions. It'll be so much worse this time for the sheer level of indebtedness of the people.

For businesses, I think the knives will be sharper and swifter. Businesses go under, people lose their jobs feeding into the negative loop of further personal debt.

It's going to get scary.

PS. Am I the only one who when reading this forum feels a cold shiver down his spine a few times a week? I want to know what's going on, but I don't want to know what's going on.

Edited by Pacific State

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I doubt they would if you've got a mortgage with them, especially if there's a wiff of negative equity. The last thing they want is for you to default - they want you to keep paying up!

I'd love to know those figures.

When I was growing up, my parents always told me (as it was the received wisdom at the time apparently) that your mortgage provider should never be your bank account provider. It's best to give two different companies possession of one ball each - if you get your mortgage and banking from the same place, it has you by the short and curlies and they'll screw you at the first opportunity.

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I'd love to know those figures.

When I was growing up, my parents always told me (as it was the received wisdom at the time apparently) that your mortgage provider should never be your bank account provider. It's best to give two different companies possession of one ball each - if you get your mortgage and banking from the same place, it has you by the short and curlies and they'll screw you at the first opportunity.

I remember that, too, Also, keep any savings accounts separate from any account likely to go into overdraft - stops sneaky off-setting.

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Interesting point PS, and a somewhat tricky one to give personal details on as my overdraft facility is something I have but don't use (rather like the chocolate fondue under the stairs), and my place of work doesn't run on credit either*.

Off the top of my head, I'd have thought overdraft facilities would be behind credit cards in the firing line, and whilst I know of a couple of people who've had limits slashed, it doesn't seem to be too widespread as yet.

Oddly enough, the bank would benefit from removing my overdraft, as I'd just end up leaving an extra couple of grand in the current account on the off-chance.

* Though a number of our competitors do... bring it on, bitches!

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Bank pulled the plug on a contractor on Saturday we use at work. The bank processed payment received in to the companys account on Friday for last months work then froze the account. I do not know the ins and outs of the situation, however they were busy and had a lot of work on. Cashflow problem, unpaid debt from another company or knee jerk reaction from the bank concerned? A lot of unhappy 1 man band subcontractors have not been paid by the contractor. Brought the current economic woes uncomfortably close.

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I'd love to know those figures.

When I was growing up, my parents always told me (as it was the received wisdom at the time apparently) that your mortgage provider should never be your bank account provider. It's best to give two different companies possession of one ball each - if you get your mortgage and banking from the same place, it has you by the short and curlies and they'll screw you at the first opportunity.

Interesting. So you think that offset mortgages are a bad idea then?

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Interesting. So you think that offset mortgages are a bad idea then?

I was about to type the same thing.

My experience of offsetting has been good. If you can save some money, you save money !

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I was about to type the same thing.

My experience of offsetting has been good. If you can save some money, you save money !

Until the bank decide they no longer want you to be able to offest into Neg Eq and reel up the drawbridge on your limit. Not a margin call I guess if you've got the cash in the offset already ;)

As to the whole current account/mortgage/savings in different institutions, woohoo, I got a financial decision right for once. More luck than judgement mind. :rolleyes:

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This is where some input from a retail banker would be useful.

In the "old days" the banking was branch based, so someone would look at their files on you to work out what they thought your personal situation was. These days it seems to be more computer based or credit scored. It actually seems to be difficult to get banks to make decisions based on individual circumstances.

yes, in GC1, my accounts were "branch based" with Peter, the manager.

When things got hard, Peter became emaciated and all his decisions were taken away.

If you read your terms and conditions and have multiple accounts, then balances from one can be taken to offset another, usually without notice or redress.

If you go bust and you have a joint account, your partner gets saddled with the WHOLE debt.

if you have offset accounts with mortgages, then, clearly and plainly, the savings account and the mortgage are for all practical purposes, the same.

All these things work well in good times. In bad times, protect yourself... your bank wont do it for you.

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Interesting point about keeping current accounts and mortgage providers separate. Doing so would, I guess, give your current account provider less information on which to base a decision as to whether or not to lend you money (i.e. give you an overdraft). If you've got both from the same bank, habitually run an overdraft of a few hundred quid but are reliable about paying your mortgage and are not in a significant level of negative equity, I'd have thought that the bank would let things continue as they are. They're making interest out of your overdraft and the mortgage loan is a sound one. However, if you have a current account which is habitually a few hundred quid in the red and the bank doesn't know anything about your mortgage, the situation is different. They don't know if you own much equity in your home or not, or if you're about to start defaulting on your payments, or anything like that. So they might decide to play safe and axe your overdraft facility.

But I agree that credit card limits will be seriously cracked down on before current account overdrafts.

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I have always thought it was useful to separate accounts as they have done this take from one account to pay another stuff before now.

Then again I dont care about them pulling overdrafts or credit cards coz until recently I havent had any money(student). If they pull my credit card what are they going to do - strongly tell me to pay it back. ok 5 pounds a week or whatever. I just cant imagine them doing this, not to everyone.

I can see them shaving there limits - however. e.g. Lloyds were quite responsible - when I c*cked up paying a couple of quid over a couple of months - due to changing the way i worked - they reduced my already paltry limit a couple of hundred quid. This is a good thing as I am paying it all down now.

Anyway - my point is irresponsible people have nothing if they dont own a house(with equity) so what are they going to do? You cant put everyone in prison and you cant make everybody bankrupt.

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PS. Am I the only one who when reading this forum feels a cold shiver down his spine a few times a week? I want to know what's going on, but I don't want to know what's going on.

Yes..

I'm actively thinking that the next time (if there is a next time) my credit card company 'responsably' sends me some credit card cheques with advice to pay them into my current account, and it's 0% for a year, I might fill up the ISA allowances.

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This is where some input from a retail banker would be useful.

In the "old days" the banking was branch based, so someone would look at their files on you to work out what they thought your personal situation was. These days it seems to be more computer based or credit scored. It actually seems to be difficult to get banks to make decisions based on individual circumstances.

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I'd love to know those figures.

When I was growing up, my parents always told me (as it was the received wisdom at the time apparently) that your mortgage provider should never be your bank account provider. It's best to give two different companies possession of one ball each - if you get your mortgage and banking from the same place, it has you by the short and curlies and they'll screw you at the first opportunity.

Very sensible advice. I think what may well happen is that banks will effectively 'withdraw' overdraft facilities from people by forcing them to 'pay it back' by adding it to their mortgage. That way it becomes a secured debt. This has a dual benefit to the bank since it means that they require less regulatory capital against the loan and in any case can effectively jump the default queue by positioning themselves ahead of other unsecured lenders.

To be honest now that we have credit cards I cannot see why banks offer overdrafts anymore to individuals - although a lot of small businesses still rely on overdraft finance.

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But are overdrafts not a simple easy way for banks to make money? I equate them to some form of mini (or not so mini) loan. I think it is far more likely that banks will start penalising anyone who does not hold debt with them - ie charging for accounts/withdrawls/direct debits etc.

Ah sweet.

when they have a cash problem, banks go into survival mode. They possess houses, they close accounts, they withdraw facilities, they encourage you to secure unsecured loans, they swap balances then tell you to foxtrot oscar.

Forget banks being nice and it not worth their while to recover debts.

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on the way up its always - its different this time a new paradiym sp?

one the way down its always the gold bugs forcasting doom

hell we went through world wars and guess what no doom

before the internet you gossiped at the pub now you have this board, this board is very very negitive i think some here are more into end of capitalism lets be kafta wearing hippes on shared land

thats ******** i am not into socialism/communicsm, i an into free market correction in overdone cycle.

in 20-30 years we will all he here again but we will be old hands and probably rich 8)

if i can say one thing, in good times, put 1-2% of your take home into gold, in bad times like now, take 1-2 % out per year to buy distressed but solid stocks.... simple will make you rich!

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Even though I was a teenager during the 90s crash and recession, I remember big stories about the banks pulling the rugs from under people and businesses that lived on overdrafts.

How far are we away from that now?

The carnage would be all-encompassing. For the skint or the spendthrift for whom the overdraft is a lifeline with which they can buy food or pay the rent/mortgage, it could trigger 30s style poverty and accelerate repossessions. It'll be so much worse this time for the sheer level of indebtedness of the people.

For businesses, I think the knives will be sharper and swifter. Businesses go under, people lose their jobs feeding into the negative loop of further personal debt.

It's going to get scary.

PS. Am I the only one who when reading this forum feels a cold shiver down his spine a few times a week? I want to know what's going on, but I don't want to know what's going on.

But are overdrafts not a simple easy way for banks to make money? I equate them to some form of mini (or not so mini) loan. I think it is far more likely that banks will start penalising anyone who does not hold debt with them - ie charging for accounts/withdrawls/direct debits etc.

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Even though I was a teenager during the 90s crash and recession, I remember big stories about the banks pulling the rugs from under people and businesses that lived on overdrafts.

How far are we away from that now?

The carnage would be all-encompassing. For the skint or the spendthrift for whom the overdraft is a lifeline with which they can buy food or pay the rent/mortgage, it could trigger 30s style poverty and accelerate repossessions. It'll be so much worse this time for the sheer level of indebtedness of the people.

For businesses, I think the knives will be sharper and swifter. Businesses go under, people lose their jobs feeding into the negative loop of further personal debt.

It's going to get scary.

PS. Am I the only one who when reading this forum feels a cold shiver down his spine a few times a week? I want to know what's going on, but I don't want to know what's going on.

You should move in with the Masked Tulip. You could cuddle each other for comfort in the long dark nights ahead.

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Interesting point about keeping current accounts and mortgage providers separate. Doing so would, I guess, give your current account provider less information on which to base a decision as to whether or not to lend you money (i.e. give you an overdraft). If you've got both from the same bank, habitually run an overdraft of a few hundred quid but are reliable about paying your mortgage and are not in a significant level of negative equity, I'd have thought that the bank would let things continue as they are. They're making interest out of your overdraft and the mortgage loan is a sound one. However, if you have a current account which is habitually a few hundred quid in the red and the bank doesn't know anything about your mortgage, the situation is different. They don't know if you own much equity in your home or not, or if you're about to start defaulting on your payments, or anything like that. So they might decide to play safe and axe your overdraft facility.

But I agree that credit card limits will be seriously cracked down on before current account overdrafts.

How will your bank not know you have a mortgage? Can't they just see your history from your credit files? Isn't this how they decide to loan you money now?

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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