Barclays pulls overdrafts for some customers as cost of living crisis hits

A MAJOR high street bank is scrapping arranged overdrafts for some of its existing customers.

Barclays has been sending some customers letters advising them that they'll soon lose their overdrafts.

An overdraft will allow you to borrow money using your current account - but like any form of debt, they charge interest.

Usually there’s a charge when you go overdrawn, which gets bigger the more you borrow.

Overdrafts are handy but the interest rates are very high so it's best to avoid using them - and looking that other forms of credit if you can afford to.

But some Barclays customers are finding their overdrafts are being pulled.

One customer Tweeted: "I have an overdraft I never go into that's worth £7500. But Barclays sent me a letter telling me it’s being cut to £1750 for no reason… what’s all that about?"

Another said: "Barclays Bank removed my overdraft a few months ago. I never used the facility but does seem odd that they’d withdraw it."

Another customer also said: "I've had an overdraft facility on my bank account for over 30 years although I've never used it. Suddenly, I've had a letter saying it is being removed from 19th September 2022."

Banks have the power to close customer overdrafts without notice (though Barclays is writing to customers to inform them about the changes).

In response to these actions the banking regulator, the Financial Conduct Authority (FCA), has said that banks should "consider the circumstances of their customers - especially with the cost of living rising".

An FCA spokesperson said: “When making changes to available credit, we expect firms to consider the circumstances of their customers, including any vulnerability, to communicate clearly and to allow people time and opportunity to challenge and complain if they disagree.

“With the cost of living rising, more consumers may need to turn to the credit market, including overdrafts. Lenders need to treat people fairly as individuals and consider their needs."

A Barclays spokesperson said it reviews all personal arranged overdraft limits at least once a year, taking into account all the financial information we have about each customer.