Can someone explain overdrafts to me?

[Mariagatzs12]

Yesterday I had to call HSBC but they were useless so I'll try again here.

Balance is in positive, available balance is in negative. No pending transactions are showing and the last transaction puts the balance still in positive (current balance) however I can tell there's some pending transaction for £15 which takes the available balance into the negative.

After calling as this was a complete mystery to me it turns out it was Spotify. They explained Spotify hasn't cleared the payment yet.

Whenever i go on overdraft I get a text. I haven't received said text and my balance still shows in positive.

My understanding is that UNTIL Spotify clears the payment I'm not actually overdrawn (as money is in limbo so to speak) and then that will trigger the text and get charged for going into the overdraft. It has happened to me in the past, you have a grace period until said payment is cleared.

that all makes sense so I can't see what your question is.

you have recieved a warning that you are about to go overdrawn and are in the grace period. if you have any other money you could pay it into this account today in cash and you won't go overdrawn and will save yourself ££ bank charges.

if you are going overdrawn regularly you really need to take a look at your outgoings. a spotify account is a luxury you really don't need. there are plenty of free music streaming options. what other unnecessary luxuries are you spending on?

I have 30k in the savings account it's not about the money (I love money around all the time to maximise interest rates). Is more about that HSBC over the phone was adamant that I was already overdrawn.

I kept saying that I wouldn't until payment was cleared from Spotify. They even said I'll definitely get that text message warning when I haven't

*move

Their system has already authorised the payment to Spotify so virtually allocates the funds to stop you spending it as they are unable to return it if necessary, so even though the payment hadn’t gone through for interest and charging purposes, it was blocked out to stop you spending it.

Thanks billybagpuss that's how I understand it is. So when does the charging interest over overdraft starts? (As nobody at HSBC seems to know).

The payment is taken from your account to pay it weather is has cleared or not should be irrelevant. You should have funds in your account to cover it. That's how a bank will see it. Most banks give you time to rectify the situation and put money in the account before you are charged for this.

My bank gives me until 1/2pm to have money in to cover the transactions however if it's a DD that you are short for the bill won't always be paid depending on the amount

What's your question though?

I know most banks give you time (and notify you in fact). HSBC is mega slow because it never updates anything properly in real time (unlike Monzo) but if I haven't received said notification (that always get) surely it isn't overdrawn yet? Especially considering the balance is still in positive.

Pending payments are treated as money spent

Then why does HSBC have a balance and an "available balance". Considering the new legislation around overdraft they should.always match.

I think HSBC will take the money and be clearly in the overdraft once that transaction is in the list of transactions. Until.then I don't think it's considered "going into the overdraft" by the system

In case anyone is interested, HSBC won't charge any interest until pending transactions are cleared.

I do think though these days they tend to date the transaction on the day it’s authorised even if it takes a couple of days to come through so you’re better off transferring some money in to cover it.

In another update HSBC called to formally apologise to me :)

I agree its confusing. I called first direct, part of hsbc, about a similar issue and they said they were working on changing the wording as other customers had said the same.