Reader Question: Can my bank raid my savings to clear the overdraft on my current account?

2 min Read Published: 12 Jul 2012

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Reader Question:

I have a current account with an overdraft as well as a savings account with the same bank. What are the odds that my bank suddenly reduces my planned overdraft limit??(£3000). I’m always overdrawn by the way but the savings account has a reasonable amount in it. Can the bank decide to raid my savings account to pay for any outstanding sum following their decision?

My response:

I don’t know the actual ‘chances’ as it will mostly depend on how you manage your account.

But in theory the bank can 'raid' your savings to offset against your overdraft. This is known as 'the right to set off'.But there are rules which they must follow i.e. they can't leave you without sufficient income to cover day-to-day living expenses.

You may find this link interesting – it’s contains a number of ombudsman rulings on actual cases of what is called the bank’s ‘the right to set off’ :

https://www.financial-ombudsman.org.uk/publications/ombudsman-news/84/84-banking-complaints-involving-setoff.htm

Obviously if you are really concerned you could always move your savings elsewhere to a bank with which you don't have debts.

Best wishes

I hope that helps

Damien

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