Bank have offered me an overdraft, should I use it?

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Hello

I know I should probably know the answer to this, but I'm sad to say I don't:p :o

My bank have just offered me an overdraft of £2000, now I don't entirely trust myself so I was going to say thanks but no thanks BUT I currently owe about £1600 to additions at 32.9%:eek: Would it be a good idea to pay this off with the overdraft at 18 ish % it seems sensible to me but I don't have the best judgement so I thought I'd check with you wise people first:D

Thanks in advance

Comments

  • marksandsparksgal
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    Hiya, L-M,

    As you say, it seems to make good financial sense to take the overdraft from your bank.

    However, if you do decide to take this route, you should treat the overdraft as you would any other debt, i.e. make regular payments to it, and don't just let it sit there, racking up more interest!

    Basically, if you feel you can be strong / strict enough with yourself to pay the overdraft off, and once it's cleared either do the same with another debt (if you have any more with higher interest), and once it's clear for good, don't start dipping into it, or have it closed.

    Good luck!

    x

    PS Totally forgot, please also be aware that a bank can call in the overdraft at any time it sees fit. So you could end up being in even more of a pickle. And also, if you have any savings with that bank / money in a different account with them, they are entitled (and often do) move the money from an account that's in credit, to clear the debt / overdraft.
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  • nimbo
    nimbo Posts: 3,698 Forumite
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    if you were to take it out i would reccomend going in a nd lowering the limit of the OD (after each payday, by as much as you can afford) as otherwise it is much to easy to view it as actual available money....

    good luck sweetie

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  • ann_marie77
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    PS Totally forgot, please also be aware that a bank can call in the overdraft at any time it sees fit. So you could end up being in even more of a pickle. And also, if you have any savings with that bank / money in a different account with them, they are entitled (and often do) move the money from an account that's in credit, to clear the debt / overdraft.

    This is basically what happened to myself and why I am in more debt & trouble from OD/DCA's than I should be at the moment.

    My bank decided to reduce my overdraft by £600 and left me with least than £800 for the month. I was unable to pay certain debt's and it has just snowballed since.

    I personally wish I never took out the overdraft and found this website sooner for money saving advice.

    Ann xXx

    PS. L-M since you are in a position to be offered an overdraft from your bank, can you not ask them for a loan instead at a fixed rate!! I would have thought that this would have lower rates than a overdraft.
  • trancebabe
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    I would say that if this is your only option then do it, but (and I apologies if this is not appropriate but I don't know your financial history) check out the 0% balance transfer options on a credit card

    Transfer the balance and make sure you pay it by the end of the 0% time limit (or transfer again to another 0% if you simply can't do it in that timeframe!)

    avoid those high interest rates if at all possible!
  • trancebabe
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    should have also said... stop spending with additions!!!

    & good luck with it obviously!!! :0)
  • tyllwyd
    tyllwyd Posts: 5,496 Forumite
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    What is your credit rating like? Couldn't you get a loan at a much better rate than 33%? 18% for an overdraft still isn't that great a rate if you are constantly in the red, and as other people have said it can be difficult to keep track of where you are with an overdraft.
  • L-M
    L-M Posts: 202 Forumite
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    Thank you all very much

    TBH my credit rating isn't very good, have made some bad decisions (including an additions account;) ) so I was quite surprised to be offered an overdraft this big.

    I unfortunately wouldn't get a 0% card though I would love one! But the loan idea is worth looking into I think?

    If all else fails I think I will use the overdraft to pay it off and I will take your advice and keep making payments to it/lowering the limit so I get rid of it rather than keeping it hanging around

    Really appreciate all your input:kisses3:
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