Overdraft

PennyCrayon_2

Hi,

I've gone into my overdraft due to this recession. I was wondering whether it is possible not to pay off the overdraft and just pay the interest each month.

Will this affect my credit rating? I am quite concerned as I am trying to save for a deposit and need to know how long I can stay in the red for.
I've been overdrawn for about 5 months but have paid the interest.

planning_ahead_2

I don't know the answer to your question, but have to ask....why on earth would you SAVE whilst you have an overdraft?

Why not clear the overdraft first, then save?

Edit: Actually I just realised I probably do know the answer to your question....I live in my OD every month (£3.5k) and have a very good credit rating.

Tixy

Are you still using this account as your current account or is it an old account that you are just paying in enough to cover the interest?

Whilst ever you have an overdraft limit agreed with the bank you can pay just the interest but not actually reduce the debt. But an overdraft is repayable on demand and if the bank chooses to recall the debt you would have to repay the whole amount or risk having it affect your credit file.

That said if you are trying to save money for a deposit I would still recommend you pay off the overdraft first as the interest rate you will pay on the overdraft will far exceed the rate you would earn on savings.

DarkConvict

Agreed with tixy, debts nearly always cost more than interest on savings. Pay off the overdraft before saving!

So long as you don't go over your overdraft you won't be defaulting or missing payments, as such the credit file is unaffected.