Barclays tells clients their arranged overdrafts are reduced

Barclays is writing to some of its current account customers telling them that overdraft limits will be removed if they have not used it for 12 months.

An overdraft is a form of credit to a checking account that allows customers to withdraw money or pay bills from their bank account even if there is no money in it.

According to reports, Barclays is reducing or removing overdraft limits allowed for some banking customers. These would have been previously approved by the bank.

Barclays says its overdraft review process is nothing new and has been reviewing customer overdraft limits in this way since last year.

As many customers struggle to cope with the cost of living pressure, some have taken to Twitter to vent their frustration at the bank.

One article read: ‘I received my letter over a month ago, an overdraft of £1500 to cover essential bills in the event of a pay cut.

“Never use it but it’s been reduced to £200, I have foot surgery next month which I’ve been waiting for 3 years, 2 months off work.

Another article read: ‘Barclays gives single mum 2 months to pay off £1600 overdraft, the one she’s had with you for 25 years!’

Another customer reacted by leaving the bank permanently and switching to First Direct via the current account switching service.

He said: “So Barclays decided to withdraw my overdraft even though I’m not using it.”

‘Thanks to First Direct and a 7 day change, I closed my account and moved to one with an overdraft. Way to keep your customers #fail.’

In response to criticism, Barclays said it would not be correct to suggest that the cost of living crisis was the cause of the changes.

He says his overdraft review process is nothing new and has been reviewing customer overdraft limits in this way since last year, so it wouldn’t be correct to suggest that the cost crisis of life was a catalyst.

The bank says this is to ensure customers do not have access to more credit than they can afford to repay.

He added that arranged overdrafts are not interest-free – they are a form of debt and should not be seen as the default way to access short-term credit.

A Barclays spokesperson said: “It is important to manage overdraft like any other debt, and we have a duty of care to try to prevent customers’ overdraft limits from being higher than they can afford.”

“As a result, we review all agreed personal overdraft limits at least once a year, taking into account all the financial information we have on each client.

“Where it suggests that a personal overdraft limit may be too high, we plan to reduce it to a lower limit, taking into account the amount of overdraft that has been used in the past 12 months. If the overdraft has not been used at all for a long time, we can delete it.

“We give customers sufficient notice to allow them to react to any anticipated changes and take the most relevant and appropriate action for them.

“If customers believe they are able to pay their current limit, they will need to provide additional information to confirm their income and expenses, so that we can meet our requirements as a responsible lender.”

What should unhappy customers do?

While Barclays customers are currently charged 35% when tapping into their arranged overdrafts, there are other providers that might be better suited to those expecting to do so.

First Direct currently offers an interest-free overdraft of £250, while Nationwide offers an interest-free arranged overdraft for 12 months through its FlexDirect account.

There are a host of other benefits that current account providers can offer, including cash back and a higher credit history.

For anyone weighing which checking account might be best for them, check out This is Money’s selection of the best checking accounts for interest, perks, packages and overdrafts.

Customers can easily switch accounts using the current account switch service. In fact, 8.2 million people have successfully done so since the service launched in 2013.

Barclays has lost almost 500,000 more customers than it has gained during this period through CASS – more than any other bank.

Many people are reluctant to change because they think it will be a problem, or worse, it can cancel large charges related to bills, mortgage or rent for example.

There are also concerns about whether earnings from the salary will be redirected to the new account.

The switch service tried to solve all these problems. CASS confirmed that they completed 99.7% of changes within seven business days, while 89% of end users were likely to recommend using the service.

As for common concerns about the switch, all outgoing payments, such as direct debits, and incoming ones, such as salaries, will be automatically transferred from the old account to the new one.

Payments accidentally made or requested from the old account will also be automatically redirected to the new account for as long as installation is required.

The Change of Current Account Guarantee means that a Money Changer will receive a refund for any interest or fees on their old or new current account if there is a problem with the change.

End users can switch if they are overdrawn, but they will need to agree the required overdraft facilities with their new bank or building society.


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