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Barclays removes overdrafts if they've not been used by some customers in over a year - here are your options and what we know

Barclays customers have voiced concerns after being given just one month's notice that their "safety net" overdrafts will be removed during the cost of living crisis. The bank has told us it's cancelling overdrafts for some users who haven't dipped into them in for at least a year. Unhappy customers can appeal the decision - though make sure an overdraft is right for you first. Here's what you need to know.

We've seen a spate of complaints from Barclays customers worried that their overdrafts are being closed. Barclays told us this is part of an annual review of current accounts that it's conducted since 2021 to ensure people don't borrow more than they can afford. 
 
Overdrafts will be closed if they haven't been used for more than a year AND if they're deemed to be set at an "unaffordable" limit. Barclays wouldn't tell us how many people are impacted but it has over 20 million UK customers. It told MoneySavingExpert.com that affected customers will be given at least 30 days notice of the change in writing. 
 
If you've received one of these letters, you can appeal the decision, though there are no guarantees you'll be allowed to keep it. You may instead need to reapply to Barclays or consider switching elsewhere. See below for more info on this, as well as our  Best bank accounts guide if you're considering moving bank. 
 
Just remember that overdrafts are one of the most expensive forms of debt with interest rates of up to 40% – double those of most credit cards, so it's not the best way to borrow if you need to. See our  Cut overdraft charges guide if you're struggling. 

'For some, an overdraft is a safety net'

Tim Wildman, from Brighton, received a letter from Barclays last month informing him of its decision to remove his £3,320 overdraft, which he'd not used in over a year. The 52-year-old, who is self-employed, made an appointment with his local branch and asked for the decision to be reversed, but he was told he would have to call the number on the letter to appeal the decision.

On calling, Tim was told his only option was to reapply for the overdraft - something that would leave a mark on his credit file and could impact his ability to take out credit in future.

Tim said: "Thankfully at my age now, I'm financially okay but I can remember when I was younger, living hand to mouth, I relied on my overdraft and knew exactly how much I had in there. 

"With the current cost of living crisis right now, for some an overdraft is a safety net. It seems as though Barclays is trying to protect itself from its customers, rather than being there to help."

You can appeal Barclays' decision - though there are no guarantees 

If you want to keep your overdraft with Barclays, you have two options: 

  • First, ring the number on the letter you've been sent and say you want to appeal Barclays' decision. As part of this process, Barclays will need to confirm your income and expenditure, though this is not a hard credit check, so it won't have an impact on your credit file.

  • If your appeal is declined and your overdraft is removed, you can reapply to Barclays. This will, however, be subject to a hard credit check and could impact your ability to take out credit in future. Also, bear in mind that Barclays' overdrafts are not interest-free and come with an annual interest rate of 35%, so you may be better off switching elsewhere (see below for more on this). 

If you don't want to stay with Barclays, you can get a 0% overdraft elsewhere

If you don't need to stay with Barclays you may be better off switching to a bank with a 0% overdraft - though bear in mind there are no guarantees you'll get it. Use the banks' overdraft eligibility checkers first, which should help you find out if it's likely before you apply.

Banks currently offering 0% overdrafts include First Direct, which offers 0% on the first £250 and 39.9% interest on anything over that, and Nationwide, which offers 0% for the first year and 39.9% after.

However, overdrafts are debts and like with any debt, you should only take it on unless you absolutely have to. If you do have to, it's important you try to pay it off as soon as you can. See our Cut overdraft costs guide for help with this.

Of course, other banks may decide to follow Barclays in axing "unaffordable" unused overdrafts, though HSBC (which includes First Direct), Lloyds Banking Group, and NatWest Banking Group told us they had no plans to do so. Santander told us it may reduce an overdraft if it hasn't been used in over six months, but it said it had no plans to completely remove such overdrafts. 

What does Barclays say?

A spokesperson for Barclays said: "We review all personal arranged overdraft limits at least once a year, taking into account all the financial information we have about each customer.

"Where this suggests that a personal arranged overdraft limit may be too high, we’ll plan to reduce it to a lower limit, taking into account how much of the overdraft has been used over the past 12 months. If the overdraft hasn’t been used at all for a long time, we may remove it."

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