With one hand they giveth….

It appears I was right to be suspicious of the new Barclays overdraft charges and ‘personal reserve’ system.

On further inspection of the small print, it’s only a handful of account holders that are likely to benefit from these changes. Most Barclays customers who consistently breach their overdraft limit will be in approximately the same boat at the end of each month balance-wise, give or take a pound or two.

How so? Well, here comes the science:

• The bank has reduced it’s fee for going overdrawn without prior agreement from £35 to £22

• The agreed overdraft interest rate has risen from 15.5% to 18%, offsetting any gains from the reduced fee.

• Should you borrow beyond your agreed overdraft, Barclays will allow you a ‘personal reserve’, or buffer. This buffer, which is advertised as being anything up to £1500, will in fact be £250 on average. It will cost you £22 to use this buffer.

• Once you start borrowing from the personal reserve, you will not be charged for any transactions made for five days. Once the five days have elapsed, you will be charged £8 per transaction.

• If you exceed the personal reserve, you will be charged £8 per transaction.

• On top of this, credit interest has been reduced to 0%

Baring in mind most account holders who borrow beyond their overdraft are caught in a monthly cycle, the charges incurred month on month with the new system are likely to mirror those incurred with the existing system.

The marked difference between Barclays new and existing accounts is the terminology behind them. The terms of these new accounts are entangled and complex, designed deliberately to confuse the account holders.

On the plus side, nobody will be worse off. However, there’s very little to gain for those with money troubles, and this move by banks can be viewed as a distinct sidestep around the ‘unfair fees’ problem.

‘Barclays slash overdraft fees’? Don’t believe the hype.

 Numbers, numbers, numbers…..

Thursday 29th May, 2008 - £9,341.19 in debt…

A year or so ago, I heard about an amazing thing I could do to claw some money back from my bank – I could just make a list of all the charges I’ve had to pay over the last six years, and be reimbursed for all of them! Good idea, right? Then my mum told me I should do it, and all of a sudden I lost interest.

But finally, this week, I made myself go through my statements. I’ve got a fair amount of time on my hands, and apparently now is the time to get my claim in so I’ll be near the front of the queue if my bank does end up paying out (although that could be up to two years away). There’s an article here that explains the background to all of this.

So, all I had to do was look at my bank statements for the past six years and add up all the charges (for going over my overdraft limit and bouncing cheques). Then I had to write to my bank with a breakdown of these charges and the total I wish to reclaim, using one of the template letters from Martin Lewis’s website. Simple or what?

Not so simple when all your bank statements are in various piles of miscellaneous paperwork, but I needed to get all of that sorted out anyway. Four hours of bank-related nostalgia later (“ooh, I remember that cashpoint in Turkey!”; “did I really spend that much in Ikea in 2003?”), I had a claim of £1,540.00 on my hands. And now I play the waiting game…

Has anyone else done this recently? Should I expect some acknowledgement from my bank that they’ve received my letter? Anyone have any success stories from making claims before the process was put on hold?

 Olivia Buck says ‘Hi’

Monday 1st May, 2008 – £9,499.45 in debt…

Let me introduce myself: I’ve just turned 28, I’ve been in debt for ten years, and now I’m desperate to pay it off. How did I get myself into this dungheap of a mess of a quagmire?

I’ve always been rubbish with money, and now I’m rubbish with debt. Being in the red was fine at uni - like so many students, I got used to spending money that wasn’t mine. After I graduated, I lived with my parents for two years and paid most of it off, but then I moved to London.

I’ll tell you this for nothing: Living in London is expensive. That’s the first of many shiny nuggets of wisdom you’re going to get from this blog, and I hope you appreciate it. It’s not like I was eating diamond-encrusted swans for breakfast, but an Ikea spree here and there soon adds up.

Over the last year or so, I’ve had the feeling I should be getting out of my debt-hole. My credit rating has gone past ‘high risk’ and into ‘extreme’ territory – only adrenaline junkies and the mafia would lend to me now - but mainly I want to cut up my credit cards because being in debt feels horrible.

So far, I’ve made the following efforts:

• Although I’m self-employed, I’ve got a second job as a part-time secretary. It’s almost unbearable, but it pays the rent.

• My biggest debt was on my Barclaycard at nearly 30% APR, so I’ve transferred half the balance to a Tesco card on an interest-free deal.

• After doing that, I cancelled my Barclaycard and set up a standing order to make regular payments. When I explained why I was doing this, the Barclaycard people were kind enough to drop my Standard APR by a couple of percent.

Even after that, I’ve still got credit card bills of £200 a month and those payments are covering little more than interest. I also have an overdraft limit of £3,000, which I was always straying past before I got the temping job (bad news at the time, but I might be able to claim back some bank charges – more on that later…).

So, here’s the bottom line: How much I owe.

Barclays overdraft: £3,000 (I’m always at the limit by the end of the month)

Barclaycard: £2,977.46 at 27.9% APR

Capital One card: £999.00 at 24% APR

Tesco card: £2,399.00 at 12% APR

NatWest card: £123.99 at 13% APR

That’s a total debt of £9,499.45 (plus interest), which I plan to eliminate completely by my 30th birthday at the end of April 2010. I then plan to fit Jupiter into a blender and become the first woman to unicycle across the Atlantic.

My first job is to pay off that pesky little NatWest card as quickly as possible. I currently pay off that card at £10 a month so, once it’s taken care of, I can add £10 onto my monthly Barclaycard payment.

I’m open to suggestions, so please help me out!

 I’ve got 24 months to get solvent and apart from Ebaying all my belongings and working overtime, I need to know: 

1. Can I make more money?
2. How can I save money so I can increase my card payments without feeling the pinch?
3. What have you done to pay off your debts?
4. What works and what doesn’t?

 Over the coming weeks I’ll be trying out any suggestions I’m given (apart from illegal ones) and regularly reporting back.