What happens to my overdraft if co-op goes bust?

I have a student account with co-op and am, like most students, hideously far through the interest free overdraft. I've suddenly realised that if co-op goes bust, there's a chance I could be required to pay that money back straight away, which I simply won't be able to do.

Does anyone know what happens to student accounts in their interest-free overdraft if the bank with which they are held goes bust?

Reply 1

username402722

Most likely as happened with one of the building societies or ex-building societies, the account will transfer to some other bank. So you'll still have to pay it back at some point.

Reply 2

LukeSimpson1234

Original post by barnetlad

Most likely as happened with one of the building societies or ex-building societies, the account will transfer to some other bank. So you'll still have to pay it back at some point.

I'm assuming there's no guarantee that this bank will have the same conditions on the overdraft as co-op? So whereas it is now a free overdraft, could I be hit with massive charges for being overdrawn by the new bank?

Reply 3

username402722

Original post by LukeSimpson1234

It may be different. Let's hope the Co-op remains.

Reply 4

Studentus-anonymous

I think it's about time to transfer to a more stable banking institution and pay off those debts if at all possible! :s-smilie:

Reply 5

Rakas21

Original post by LukeSimpson1234

If your account balance is positive then its guaranteed by the government. If your overdrawn as appears to be the case then the likely outcome is that government will sell the Co-Op to another bank however there's a small chance that the Co-Op would go into administration in which case your account would close and the administrators would have a fire sale and sell your debt to somebody else, that's the point to worry about terms and conditions.

Reply 6

numanali

Original post by Rakas21

Covered pretty much everything I was going to say :smile:

Posted from TSR Mobile

Reply 7

balotelli12

Any bank can call in any overdraft at any time they wish.

Reply 8

Lord Jon

Start moving all regular credits and everything to a different bank if I were you.

Reply 9

Fullofsurprises

The government isn't going to allow a bank to go bust (they proved that conclusively during the 2008 crisis, even to the point of bankrupting the taxpayer to stop banks going bust), especially not a fairly small one like the Co-Op.

If this bank gets into really serious difficulties, the government will either force its sale to another bank or else transfer all the account holders to another bank. Either way, your facility will (at least initially) continue. Admittedly there might be a longer term problem in that scenario, as the receiving bank might not want to continue your facility. However, this could also happen with Co-Op. I believe, reading blogs and talking to people, that the Co-Operative Bank are actually fairly notorious for randomly reducing people's overdraft and credit card limits.