Default notice for being £4 overdrawn

[Ojoy1986]

Help, I have just been sent a default notice over a £20 direct debit that was unpaid last week. My bank refused the payment as it would have put me £4 overdrawn. Normally they have given me an unarranged overdraft of up to £25 when I have gone a few pounds into the red. Has anyone had any luck having a default of this value reversed? Can’t speak to anyone as all offices closed until Monday morning. Thanks.

Just pay it? We have the occasional DD bounce for whatever reason, life happens. I can’t say it’s massively affected my credit score.

Normally they have given me an unarranged overdraft of up to £25 when I have gone a few pounds into the red

If this is something that you often do, they've probably decided that you've had enough lenience and they want to force you into managing your finances better.

You could try for an authorised overdraft, but now you've shown them you can't manage your finances as they'd like, they may refuse.

There's a few things other you can do to manage cashflow so this doesn't happen again, eg reviewing and reducing expenditure so your money lasts longer, moving direct debits to later in the month, after payday if possible or use of a credit card for essential expenditure like food and fuel/public transport so they money is taken out of your account 3-7 weeks later (obviously pay off in full every month and don't use as an excuse for extra spending).

You could also look at moving your account to another bank, that pays an incentive and also offers a free authorised overdraft (but if possible, pretend it doesn't exist, as it's the most expensive mainstream way to borrow money and generally compounds any financial difficulties unless used only very occasionally, so it's only there to allow regular payments near the end of the month, not as regular extra spending money.

As PP said, if you’ve been regularly doing this, it’s an issue.

The £20 went straight to default immediately? Have there been previous payment issues there too?

Best thing to do is pay it immediately. Talk to citizens advice if you are regularly struggling to meet payments

I think you're getting terms mixed up op because if the bank declined your request for an unauthorised overdraft limit (ie returned the DD unpaid) - then your account didn't go overdrawn and there's nothing to send you a default notice for.

They'd have sent you correspondence outlining the returned payment maybe - but that's not a Default Notice.

Exactly what correspondence have you had?

I read it as the default notice is from the company she was meant to pay, not her bank about the failed OD.

Ah I think it's the thread title that was throwing me.

If that's the case op and you have a Default Notice from X company for £20, due to the missed DD payment - just pay it. Although Default Notices are usually issued after 3-6 months of missed payments so that would be unusual.

A Default Notice is a warning giving you time to rectify and bring your account up to date - a default notice itself has no specific negative impact to your credit file.

There will be a date on it by which time you must pay all arrears - don't miss it. Once that date passes, THEN the account will actually default and this default is registered at credit reference agencies for 6 years.

Thanks @BlumminFreezin yes that is the case, the notice is from a company not the bank itself. I wonder if it’s because it’s the first payment (house insurance) didn’t realise the direct debit date was so late in the month. I’m going to call them on Monday to pay and then call the insurance company to pay the full amount so I don’t get myself into this mess again. It has alarmed me to get this default notice from one missed payment for such a tiny amount I am hoping I can discuss having the default notice removed as I’ll be paying in full within a week of the missed payment. Really hoping the notice itself won’t go on my credit record.

Read everything carefully in your home insurance contract. It should tell you about the credit issue, but more importantly the consequences for you policy of non payment. I'd be more worried about them cancelling the policy leaving you uninsured.

You don't need to get anything removed (there's nothing TO remove) and the default notice does NOT affect your credit record. 100%.

If you bring the account up to date before the date on the notice, that's it.

A default notice is just that - notice of a potential default IF you don't pay xyz by x date. It's not a default.

Does your insurance co have an account you can log in to and make the payment online? I take it that it's a small insurance co as many are usually available outside the normal 9-5.