Understanding overdraft and goals


#1

If I have multiple regular transfers set up into goals but those transfers put me beyond the arranged overdraft limit, what happens? Do some of the transfers to goals fail? Are there charges for exceeding the overdraft limit even if it is covered by money in goals? I understand that it is the total sum of main balance and goals that is used to calculate interest paid and received but I’m not sure what happens if transferring to goals would cause the main account overdraft limit to be exceeded.

I have money in goals already so the transfers wouldn’t put the entire account as a whole overdrawn.


#2

Hi Andy, is that a gun in your profile photo??


#3

Yes it’s an avatar a friend made of my face superimposed onto James Bond. It was picked up automatically from Gravatar. Is it against the terms? I can remove it, it’s an old thing anyway.


#4

Thanks for changing that so quickly, Andy :+1:t2:


#5

Haha - I did think it looked awfully like the Goldeneye logo from old!


#6

Cheers, it’s just we’re a nice friendly bunch around here! No weapons required!


#7

Hey @AndyM

For arguments sake, if you have a £500 overdraft, a £0 balance in your current account and £0 in your goals.

You can move all £500 of your overdraft into a goal and you won’t be charged anything. Essentially your account balance has remained the same, all you have done is moved it from your overdraft allocation to your goal.

Another example is if you have a £500 overdraft, and £500 in a goal. If you continue to spend and go into your overdraft you won’t be charged as your overall account balance is still positive.

One way to get a ‘fee-free’ overdraft is to match your overdraft in a goal. So you can continue to spend without being charged


#8

Hi @LoganAllan Thanks I understand the interplay between the overdraft and goals with respect to interest charged/received. What I’m unsure on is what happens if a scheduled goal would cause the main account balance to exceed the overdraft limit even if it is covered by a higher amount in goals.


#9

For a specific example. Say I have a £500 overdraft and a -£400 main account balance and £1000 in a goal. What happens tomorrow if there’s a scheduled transfer from my main account balance to a goal for £200. Will the transfer fail? If it doesn’t fail are there charges? What if there are two transfers set up to goals, one for £50 and one for £150. Will the £150 one fail and the £50 one succeed or will they both fail? If a transfer fails do I get notified?


#10

My gut instinct would be it would fail, but I’m interested in the official answer.

The reason I think it would fail is I don’t think you can use the money in the goal to fund a transfer into the goal. You’d effectively be using the same money twice.

Starling decline transactions that would take you over the overdraft limit, irrespective of what’s in goals. If I had £10k in a goal, and a £5 main balance and £100 overdraft, a payment for £110 would still be declined


#11

I may be wrong (it happens quite a lot), but my understanding is…

£500 overdraft, with a -£400 main balance and £+1000 in Goals, means your “account” is £+600.

The scheduled transfer of £200 from main balance to Goal, wouldn’t change your “accounts” overall balance of £+600 (and therefore no extra fees).

@LoganAllan - Correct me if I’m wrong…


#12

If you have an overdraft of £500 and your main balance is -£400, the £200 transfer will fail (you don’t have £200 available, you have only £100 available).

Also, the £150 transfer will fail (see above). However, the £50 transfer will succeed, because it’s less than your available balance of £100.

Starling doesn’t automatically move money from your goals to cover payments, therefore it doesn’t matter that you have £1000 in a goal, the payment will still fail.

That is my understanding anyway. I am sure someone from Starling will clarify soon. :slight_smile:


#13

Thanks that sounds logical. I guess my worry was the transfer would still succeed and put me over the overdraft limit.


#14

Oooooo… Everything I thought I knew might be wrong…


#15

Before I enabled my overdraft I had a scheduled goal payment fail due to insufficient funds. But the annoying thing was, even after I added more funds the scheduled payment didn’t restart. I had to manually re-create the scheduled payment to get it going again.

I spoke to Starling and they confirmed it was a known bug, but I’ve not heard if it was ever fixed.

@LoganAllan Do we know if this bug has been fixed? If so, I presume it would just continue from the next scheduled date, and it would be up to the user to manually transfer the amount for the failed payment?


#16

I don’t think starling do the classic unauthorised overdraft situation. If you don’t have the money available, it’s simply declined.

What happens when a transaction is offline and you don’t have the available funds, I’m not sure though :thinking:


#17

Offline transactions can result in you entering an unarranged overdraft.

Starling won’t penalise you though, they will charge you either 15% OR your agreed overdraft rate (if you have an overdraft).

From their terms…

https://www.starlingbank.com/legal/account/terms/

21. It may happen that your Account becomes overdrawn by an amount which is more than your agreed overdraft or by any amount where you do not have an agreed overdraft, e.g. for some offline payments or where interest is charged to your Account where you have used the maximum agreed overdraft – see the meaning of “in arrears”. If this happens, you must repay this amount immediately and interest will be charged until it is repaid either at the interest rate of your agreed overdraft or if you do not have an agreed overdraft at an interest rate of 15% EAR (which has the meaning set out on the Rates Pages).


#18

Yes, but as Starling take into account what is in your Goals… This doesn’t matter to the OP’s original question does it?


#19

Correct. I was responding to @Ryan. :slight_smile:

It would be good to get some clarification from Starling though…

@StarlingSupport


#20

Ahh - Apologies!

Although we have a different understanding on this as well…

Clarification would be super.