Q – My current account is with AIB Bank and they have stopped my overdraft facility. It was only € 2,000 and I only exceeded it for the first time recently. Can they do this ? I have been put on short time by my company and my wife was laid off recently. They have told me they are switching this to a term loan over 3 years. Do I have to accept this and should I move to another bank ? Brian – Waterford
A – There is no rush to find another current account provider Brian. To compare what providers are available, check the Competition & Consumer Protection Commission (https://www.ccpc.ie/consumers/money-tools/current-account-comparison/) In some respects they are doing you a favour – overdrafts are very expensive and are meant to be in credit at least 30 days of the year. Overdraft interest rates are 13% +, exceeding your overdraft without permission is an additional 7% to 12%, while there are referral fees (most banks – € 5.15 per item for checking your account to ensure you have nt gone AWOL) and unpaid fees (this can be as much as € 12.70 per item to be sent back) Exceeding your overdraft is a little like walking into your local supermarket, grabbing a tin of beans, walking out and telling no one. Except in the bank’s case, they allow you BUT charge you plenty ! You will find the term loan has a cheaper rate but over three years, because you are also repaying capital, the repayments will hurt your cash flow. You must do a budget and plan your finances. I empathise with your situation – if your expenditure exceeds income, which it is doing, then your two choices are earn more or cut costs. Perhaps your wife will find new employment and you could find a second job. Whatever happens, you must consider your financial situation and work your way through it. Be positive – Best of luck.