Is using arranged overdraft bad?

maxsquared

A quickie, in most months my balance fall into arranged overdraft, is this bad?

YorkshireBoy

Yes it is bad, but not for the reasons you probably think it is.

Dipping into your overdraft "most months" means you're not managing your money properly and you're incurring unnecessary debit interest. Try to build yourself a credit buffer by earning more/spending less.

Living from hand to mouth in the current economic situation is not a good place to be, and I'm speaking as someone who is about to be made redundant...again!

Strangely, your credit rating with the bank could actually improve because they'll see opportunities for providing you with a loan.

RayWolfe

In addition to what YB recommends, there is also the issue of banks being able to recall overdrafts on demand.

maxsquared

Yes, I know what you mean and thanks. It seems I need to get a new job, just every months, I go into my arrange overdraft for around 70 pounds, so maybe get a new job will pay 70 pound more every month.

Swans1912

RayWolfe wrote: »

In addition to what YB recommends, there is also the issue of banks being able to recall overdrafts on demand.

Also they may simply stop providing you with an overdraft just before you actually need it too!

I agree with what has been said, if your dipping into your OD then your living beyond your means. How much do you go over by each month, is it the same amount every time?

milfordmadness

maxsquared wrote: »

Yes, I know what you mean and thanks. It seems I need to get a new job, just every months, I go into my arrange overdraft for around 70 pounds, so maybe get a new job will pay 70 pound more every month.

Yea but to be honest £70 isn't a lot to repay on demand is it so i'd not bother - also your interest on that amount will be peanuts.......

I'd leave things as they are, it will deffo help any behaviour score you have as it proves you can be trusted with credit so they may offer you more in long run, ironically enough! As last poster states, they may see it as a marketing tool to sell you loans etc knowing you're 'good for it' so to speak (usually the borrower would go o/drawn again and basically start the same vicious circle again!, loan, o/d, loan increase, o/d, loan increase etc etc)

456789

Spend £70 less every month

milfordmadness

456789 wrote: »

Spend £70 less every month

why? whats £70 lol? Its like back pocket change - I put that in the bandit on a night out! Lol, not quite but you get the point!! Did you read the post by the woman who has a £10k o/d.... now thats where i'd agree with you but spending less than £100 per month on your o/d is good, in my opinion.

rb10

456789 wrote: »

Spend £70 less every month

You only actually need to spend £70 less one month. As if, say, in March, you spent £70 less, then your lowest balance would be not -£70 but £0. You'd then start April on £0, so in subsequent months should return to £0 at the end of the month.

Or, possibly more realistically, do it over time (e.g. spend £10 less per month than you're doing now over 7 months).

Mikeyorks

456789 wrote: »

Spend £70 less every month

No - he only needs to do it the 1st month!

That's the silliness of going into the o/d (for such a mild amount) every month ..... it's the same money every time. Just fix it the once ...... and it goes away. Then just needs the discipline to keep it at that point .... and it feels better?

Mikeyorks

rb10 wrote: »

You only actually need to spend £70 less one month.

Are you an alias for YorkshireBoy? He always does that to me .... but times it better ... generally just 1 minute in front!