Pay to be Poor

[LetterBug]

Got sent into an un- arrangement overdraft and it costs £30. So you are fined for having no money. Meaning when I'm paid I will be £30 down from the off. Meaning I will more likely run out of money again. costing another £30.

Pay to be poor.

Yes, definitely.

Before I got my H.A flat, I used to private rent and my landlord told me how much his mortgage was. £500 LOWER than what I was paying in rent.
I also have prepayment meters and you can't just change them if you are in private rent - it's usually in the lease that you can't. Also, I think it costs hundreds to get them changed over.

Council Tax as well. My ex MIL is quite poor and one month she could only pay half her council tax because she had a vet bill for her dog. She notified them and rectified it by paying the other half the next month. However, the council had already passed it onto the debt companies who started harassing her and whacking on the 10% extra charge, which is hundreds. This is a woman in her 70s with multiple health issues and has had cancer three times. She was having panic attacks about it. It's just awful.

I can't afford to learn to drive or run a car so shopping is difficult. Can't bulk buy things (although sometimes pair up with others to buy bulk offers).

I joked the other day that everything I search I set the filters to "price low to high". I always have to buy the cheapest and they don't last as well.

@GattioAnyone

I always remember a pregnant spice girl getting free prams from companies. Strick me as really sad.

Again - this isn’t free stuff for the sake of it. It’s for advertising. The company expects business out of it - not from the spice girl themselves but people seeing them use it.

Now sure how this is sad, it’s simple logic, what would companies get out of sending free stuff to random people? There are however companies that donate shoes, clothes or whatever for every X amount spent on their shop.

@MistyElla

The ‘discounts’ for people in high paying jobs go beyond free/subsidized meals. Things like regular new work computers and iPhones with generous international data plans (so no need to pay for expensive tech or telecom contracts), company car allowances, private health insurance that covers things like prescription sunglasses and children’s orthodontia, school tuition subsidies, preferential mortgage rates, etc. Those who travel loads also end up with massive stores of airline miles to use towards hotels, flights, etc. A lot of people who travel regularly for business never end up having to pay for flights or hotels because the accrued miles pay for everything.

This is shocking isn't it? I've always commented on celebrities being offered things for free as part of a promotion but this above must be the case for so many highly paid people .

I agree with everything the OP and others are saying in respect of rent costing more than a mortgage , rentals not being secure so having to move frequently , if you have no car and having to rely on a corner shop where things can be twice as dear and lower quality than a large supermarket , and OP's point about cost of withdrawing cash - £1.85 off £10 is a huge percentage . And the extra cost of paying in instalments - in particular those furniture / white goods stores where people pay in instalments .

@RoseMartha

I got told today that while I can pay for breakdown cover on my boiler it now doesnt cover a service because its too old. But if it was newer it would. I cant afford a new one.

Who is the cover with? Seems an illogical idea because surely a service means it's less likely to break down?

If you don't want to pay 3x subs for something, don't send them or don't have 3 kids

I'm glad that you are (presumably) not involved in Scouting. Scout Groups take pride in being inclusive, and that applies to families who would struggle to pay the subs. Besides, the PP didn't say that s/he didn't want to pay the subs, just that they shouldn't have to pay more to pay in instalments. And s/he's absolutely correct. I can see why some businesses may charge more for instalments, but not the Scouts!

@BoredZelda

And they dont HAVE to let the DD go through that pushes you into your unarranged overdraft or let you draw out money that pushes you into it either, but why would they stop it when they can hammer you with a £30 fee and charge you daily fees.

Of course they do. A DD is an instruction to your bank to pay an amount. If your account has an overdraft facility they can dip in to it. If you don’t want that, and would prefer payments to be rejected, ask for your account to have no overdraft facility. But if you know a DD is going to put you in to overdraft, call your bank.

You've overlooked that she did not have an overdraft facility. Bank accounts should work the way you assume, but the way most UK banks have always worked is that they let you go overdrawn anyway and then charge you even more than they would if you had wanted an overdraft in the first place.

She would have been better off if the bank had just not made the payment. By making the payment on her behalf, the bank substitutes a debt to itself for an amount owed to someone else, charging her an enormous fee for the privilege. (This is so outrageous that, as a number of posters have pointed out, it has been banned. OP has not addressed how come this is happening when it's no longer allowed.)

It is outrageous that Banks allow payments to create unauthorised overdrafts in any circumstance than a person having explicitly opted in to them doing so. One can get bank accounts that don't, but they are exceptional, possibly because they aren't very profitable for banks.

I also disagree that she should have an overdraft. The best solution to the problem of outgoings exceeding income is to stop the outgoings, make the original debtor wait for the money, not switch the debt to someone who will charge you more for the privilege.

"original debtor" is wrong, I meant original organisation you owe money to.

I have just googled Barclays, as a random UK bank, as I wanted to find out how it was possible to be charged £30 for an unauthorised overdraft. They first page I've found say they don't do them, they will just not make payment, which is as it should be. I guess they changed what they do when charging for unauthorised overdrafts was banned.

Interestingly, Barclays also say that if you do go overdrawn, because they've been unable to stop a payment, they won't charge any interest.

I think OP needs to move to a different bank.

The poverty premium is very real.

@cinderhella

The poverty premium is very real.

I saw it today, or an example thereof

Washing liquid.
Look at per ltr price, it gets cheaper the more you spend. If you have £10 for a big bottle it's considerably better value than of you only have £2 for a bottle.

@FissionMailed whilst I understand your point. This is just basic economies of scale. It’s always this way until you get into the wine game.

@MintJulia

What do you mean, you were 'sent' into an unarranged overdraft?

You spent more than you had?

Why don't you arrange an overdraft then?

Because an arranged overdraft is the privilege of the better off (and students). Banks don't allow people who would likely use an overdraft to have cheap one.

@fluffythedragonslayer that’s appalling. I thought the scouting association prided themselves on being accessible to all? I would query that - don’t be embarrassed about doing that. I’m horrified.

Money goes to money. My mother always said that and now I'm old(er) it is so true.

@fluffythedragonslayer

Thanks for comments re scout subs - we don't qualify as a low income family so not entitled to any financial help with anything. I can afford the installments just not all in one go.

This might be mad but I wonder if you could manage to stager the fees so that you could pay child1 3 terms then child2 3 terms etc rather than child123 1 term. Might be worth asking the leader

@MLMshouldbeillegal

the further up the ladder you go, the more free stuff you get. If you're really well off, you can even get free food!!

??? Waitrose having a secret deal where if you show them your bank statement you get a 25% discount?

Would love to know how this works.

Tesco was doing free kids meals last half term, so will hopefully continue this in future school holidays. They also do free babycinno. No obligation to buy anything at the same time.

The ones that get me is being ill. It costs so much to have a cold! Let alone prescription costs.

Easy fix, call them, tell them you will never do it again but are struggling, they'll give it you back. All you have to do is try to stay in the black...!

Word.

My husband works freelance. Normally paid £35-50 a day for “expenses”. But travel or hotel plus crew catering are included for free with the work. So goodness know why they need any.
Meanwhile I get paid for my job, spend a fortune on petrol and walk ages to not pay for parking. I bring in a salad so I don’t spend £18 a week on meal deals.
He’s 3x my wage. We could do each other’s jobs.

I think if they don't refund its time to shop around for a bank with a free overdraft.

@LetterBug

Got sent into an un- arrangement overdraft and it costs £30. So you are fined for having no money. Meaning when I'm paid I will be £30 down from the off. Meaning I will more likely run out of money again. costing another £30.

Pay to be poor.

Banks were prohibited from charging fees for overdrafts in 2019. They can only charge interest at a percentage rate, meaning a small overdraft costs a small amount of interest.

www.which.co.uk/news/2019/06/banks-banned-from-charging-extortionate-overdraft-fees/

Banks can reject a payment attempt (eg a Direct Debit) and charge a fee for that rejected payment, but these are supposed to be restricted.

So unless you ran up a big overdraft your bank may well be breaking the law.

Generally though the reason there are higher rates for poorer borrowers is because smaller loans with higher levels of default are more expensive for the bank. So they charge more. Micro finance for example has high interest rates - it’s an expensive way to borrow.

My bank will let you have it back , but you can als ask once every 12 months ?

*only ask