UP Bank Allows Overdraws beyond $0.00

Ldanparty on 16/08/2020 - 23:42
Last edited 17/08/2020 - 10:19

Be aware if you have an UP Bank account:

They claim in their Terms & Conditions somewhere that everyone gets you a Direct-Debit Overdraft facility with all UP Bank accounts, which cannot be switched off. They can and will get Debt Collectors after you to get any debts back and this will affect your Credit Rating.

There is no limit of money that they can take from your account, regardless of authorization, even if you have $0.00 in your account!

I previously authorized a direct-debit of $500 come out of my account for Insurance every two months, and this was okay. Last week, I had a shortfall in my wages and had $0.00 in my account.

Instead of "bouncing" and rejecting the $500 payment like any other Mastercard, my UP Bank account went into Overdrawn $500 and I now owe them $500.

I have since paid this debt.

When I asked them to turn off this facility, and told them I do not want to go overdrawn, they said they have no ability to turn this off!

This also means that dodgy Retailers an take advantage of this, and you will pay badly.

So just be aware of this - you can get a BAD DEBT by accident on your CREDIT FILE!

Financial

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Comments

  • Mechz on 17/08/2020 - 03:02

    Happens on almost all banks depending on how the transaction is processed.

    • DoctorCalculon on 17/08/2020 - 19:17
      -1

      Wrong. Most debit cards do not come with an overdraft (i.e. credit) facility. Otherwise, I might as well just get a credit card knowing the repercussions on my credit rating if I don't pay any debts on time.

  • Forfiet on 17/08/2020 - 03:04
    +1

    Thanks, I considered UP for using on places like aliexpress, now I'll go look elsewhere….

  • trustnoone on 17/08/2020 - 03:35
    +1

    I think they're mostly like this? I remember back in the day it would be way worse, you'd get hit with like a $200 fee or something (maybe it wasn't that high) plus you had the negative balance. If you tried to take money out again though it would then halt the purchase.
    I think they removed the fee but the negative balance now has a high interest rate. Which I understand as its essentially a loan, so I usually pay it off within a couple days that the interest was negligible.

    Though I can definitely support a choice based option if the preference is to just halt the purchase if it dips into the negative. I never thought about them getting debt collectors though. I hope it goes through a few processes before that.

    I do know NAB did something cheeky once though, as I use to live fortnight to fortnight, but I'd have to overdraw $25 each fortnight, but I'd pay it the next day when my pay came through. After 3 months though NAB stopped allowing it and I suddenly got a "free pre-approved credit card" from NAB in the mail.

    Borrowed the $25 from a mate (and paid back) for about a month, before NAB let me overdraw again.

  • JIMB0 on 17/08/2020 - 06:23
    +6

    Overdraw it by $1million and skip the country.

    • CtrlAltSpoods on 17/08/2020 - 12:31
      +1

      Why stop at 1 million? 😂
      That is nothing but a small loan, strive for greatness!

  • ssquid on 17/08/2020 - 07:18
    +3

    How is it a BAD DEBT when it's something you signed up for?
    Take responsibility for your own actions FFS.

  • elgrande on 17/08/2020 - 07:25

    What are you insuring for $500 per month..?

    • sw0rdy on 17/08/2020 - 08:47

      his life

  • pjetson on 17/08/2020 - 08:47
    +2

    This is more or less how direct debit works with all banks I've been with. A company with an agreement with the bank to directly debit customer accounts is basically able to withdraw any amount from anyone's account, and the bank will pay it, regardless of the account balance. This causes extra problems for customers when the company makes a mistake and withdraws too much, or withdraws the same amount multiple times, both of which happen a lot more than you hear about.

    • c64 on 17/08/2020 - 09:39
      +1

      there were changes to the banking code last year regarding informal overdrafts

  • redfox1200 on 17/08/2020 - 08:52
    +1

    how do you know there is no limit? are you saying i can charge myself 1 million dollars then leave the country???

    • danparty on 17/08/2020 - 10:18
      -2

      Yes.

      • swimmingtoad on 17/08/2020 - 10:27

        There is no way it would be authorised.
        Let's be reasonable. There is an internal limit within the bank, likely about $500-$1000.
        The informal overdraft facility is part of the product, thus built into their systems.

        • danparty on 17/08/2020 - 10:28

          When I asked them, they said there was no limit.

          • swimmingtoad on 17/08/2020 - 10:42
            +1

            @danparty: There will be a limit built into their system.
            Whether the worker isn't sure or they just don't offer the information, it is there.
            FYI - A lot of bank accounts allow direct debits past $0.

            • danparty on 17/08/2020 - 10:45

              @swimmingtoad: I agree even though Up Bank told me there is no limit when I asked them.

              I wonder what the actual limit is, though?

              Can someone please try Direct-Debit of $1001 and see if it works?

  • Magical Sound Shower on 17/08/2020 - 09:42
    +3

    I avoid DD whenever possible. It's not just worth the hassle.

  • danparty on 17/08/2020 - 10:32

    ANZ got a big Fine for allowing Overdrafts:

    https://www.google.com.au/amp/s/thenewdaily.com.au/finance/f…

    Many Aboriginal customers were using it as another form of Sitdown Money
    (
    https://en.m.wiktionary.org/wiki/sit-down_money
    )

    and were getting Bad Debts on their credit scores.

    Indigenous Australians = World's First Ozbargainers:

    http://youtu.be/CiE9J0nlK_M

  • danparty on 17/08/2020 - 11:35
    +1

    Just got this from UP Bank, which entirely breaches the Australian Banking Code Of Practice.

    Somebody needs to take them to the Banking Ombudsman and ACCC:

    "
    Hey there, we will honour all direct debits that overdraw your account.

    We are unable to turn off the ability to overdraw an account. This can only occur in very limited circumstances since Up does not currently offer an overdraft or any credit products

    As per the terms and conditions of your Up account you must keep a credit balance at all times and not overdraw your account or use a payment facility or request a payment service which could overdraw your account.  

    If you do overdraw your account this is a breach of these terms and conditions. 
    "

    • Mechz on 17/08/2020 - 16:32
      +3

      Well, you're directly affected so maybe you can take it up with the ombudsman and ACCC.

      • danparty on 17/08/2020 - 18:39

        Can't be bothered.

        Rather just not use UP Bank.

        • DoctorCalculon on 17/08/2020 - 19:37
          +2

          Had you not posted this thread, I would have been blissfully unaware of this issue.

          If you are concerned about fraudulent transactions, Up recommends locking your card until you need to use it. :eyeroll-moment:
          How about not having a secret overdraft facility in the first place?

  • goddaj on 04/08/2022 - 17:46
    -1

    I have dealt with Up for 4 years and never had an overdraft for more than 72 hours (in the case of a public holiday) and it was a transaction I didn't plan on paying. So I simply told them I didn't want to pay it and it was rejected almost immediately when they opened.

    It also only happens on more important transactions, if it was Amazon, Kogan or Woolworths, really anything retail, it would be denied straight up if you don't have the funds available.

    If it was rent, health insurance, car insurance type things it would overdraft the account until the next day at noon (aside from the one public holiday that was 3 days).

    Never have I been charged for the overdraft and never have I been forced into paying the negative amount. If I didn't bring the account up to balance by noon the next day, it was bounced and payment rejected.

    I think this guy/gal has no patience and is just bad with money.

    • askbargain on 04/08/2022 - 20:52
      +3

      why are you replying to a 2 year old post

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