Banking on a Barclays Personal Reserve?
Friday, November 28th, 2008
We regularly hear from Wonga customers with stories about unexpected bank and credit card penalty fees. It’s an issue that’s been widely covered in the media and there are loads of websites now set-up to help consumers reclaim questionable charges from the likes of Barclays.
So this won’t be the first blog to offer views on much maligned overdraft fees, but we’ve recently heard from several people who’ve had a lot to say about Barclays Personal Reserve. So we checked it out for ourselves and had to laugh at this thinly veiled attempt to replace unauthorised overdraft fees with… Personal Reserve fees!
So what is a Personal Reserve? Well you’re welcome to check out the Barclays site for yourself, but we’d suggest it’s a new name for describing a double overdraft. You see Barclays kindly gave their customers a Personal Reserve earlier this year (you have to opt out, much like Gordon Brown’s recent donor card proposals). It’s essentially an additional “buffer” overdraft that sits on top of your existing overdraft facility. It’s also a potential cash cow for Barclays - you’re not supposed to use it regularly of course, but we rather suspect they’d like it if you did.
True, the previous unauthorised overdraft fee of £35 was done away with, but a Personal Reserve fee of £22 is payable every five working days you’re using it, even if you’re just a few quid overspent! Compare that to taking a short-term Wonga loan for five days, which will cost you £10.70 - less than half the cost. And we don’t ‘assume’ you’ll want one either. Worse still, imagine going £100 into your Personal Reserve for five consecutive 5-day periods (the maximum allowed) - you’d be charged £110 for the pleasure!
There’s a distinct possibility that banks will be forced to scrap their huge fees for unauthorised overdrafts, so this was most likely a pre-emptive move by Barclays. That might sound like good news for consumers, but the reality is that banks are unstoppable money making machines and, as tough as recent times have been for them, they will always find new ways to generate revenue.
There’s nothing surprising or wrong about that of course - they are businesses after all - but when it becomes harder to generate cash from consumers, transparency is often the first casualty. And there wasn’t too much of that about in the first place! If overdraft fees do bite the dust at any point soon, you can bet that new, potentially even more stealthy ways will be found to make up for the lost income.
So full marks to Barclays for creativity and proactivity, but bear in mind that at the same time they decided all their customers deserved a Personal Reserve, they scrapped interest paid on positive balances in personal accounts and raised the interest charged on standard overdrafts. It seems a case of ‘giving’ with one hand while taking with the other.
















