New Bank Account = Savings?

mister.right

Hi, i'm new here and useless when it come to money management.

My current situation is that i'm with Smile, and have an agreed overdraft limit of £1,000 which I either manage to just about stay inside, or tip-toe over by £20 or so month after month. This has been the case for the best part of a year now (or the duration of "the recession" at least).

I've been advised to create a new bank account, i've just applied for one with Barclays, and to move my salary payments to that account and have all bills come out of it and use any left-over cash I have to pay off a little of my current Smile overdraft.

Is this a good tactic? Something doesn't seem to add up to me but as I said I know nothing about this stuff. Thanks for any advice you can offer me!

PS, my credit rating is probably at rock bottom so i'm not even confident that i'll be able to find another bank willing to give me an account.

opinions4u

If Smile stop seeing your salary there is a reasonable chance that they will demand immediate repayment of the overdraft in full.

This could leave you exposed financially.

You would be better leaving your salary going in to Smile and sending a standing order to another bank for your spending money, ensuring that there's more than enough left behind to cover the bills with Smile and also reduce the debt.

mister.right

I see, I didn't realise Smile could do that. That scenario would pretty much ruin me, so thanks for the heads up

focae

More importantly............you need to learn to live within your means............here is a good place to start:
http://forums.moneysavingexpert.com/forumdisplay.html?f=76