Sounds ridiculous but - do you consider overdraft as "debt"

shellstar

I remember when I was moving I was worried that my overdraft would impact on what the bank would lend us, but the attitude of the mortgage advisor stunned me. He said 'oh, don't worry about the overdraft, that's just to help you live, it's not a problem' - and thus we wonder how the world's economy went to sh*t.

Most people pay interest on their overdraft (Halifax are now charging £1 a day for the first £500 or something stupid) so of course it is debt. It is money you have spent without earning it.

I guess the question isn't really whether it's debt or not (of course it is, no matter what people tell themselves!), it's whether it's bad debt or not, and for most people it isn't.

I was finding I was constantly living to the end of my £600 overdraft (but never, ever going over the limit), which suggested to me I could live within my means, I just had to pay the thing back. I'm proud to say that this month, I am now OD free for the first time in about 4 years. I've also cancelled the facility, as I clearly don't need it! :T

I feel good today! :j

JuicyLou

I know from experience that an overdraft really is debt. I took out a student overdraft when I went to university and due to illness I missed payments, incurred charges and then before I knew it I owed £1400 I couldn't pay back.
I'm in the process of applying for a DRO to be free of this debt, which means my credit file will be completely screwed for the next 6 years.
So yeah, it's a real debt.

BigCraigJohn

In the words of my local bank when I asked about the renewal of my od being up"overdraft is a form of lending, and will be treated like that when renewed" so if you have used responsibly you'll be allowed to keep, if not theyll ask you to pay it back.
Definitely a debt

Woowoo

I definately count my £2900 overdraft as debt! I have now changed bank accounts and just transfer the interest fee over once a month as I am concentrating on clearing my credit cards first.

Am a little worried now though that Tixy has said and overdraft is repayable on demand, as I could never come up with that kind of money.

Tixy

Hopefully you won't have to Woowoo. However I think you should be aware that the fact that you have stopped paying your salary in and are not clearing the debt at all might mean that at the next annual review the account is 'flagged up'.

If they do recall it, you would need to write to them with a monthly repayment offer, however at this point if they recall it and you cannot pay this will start to affect your credit score.

Woowoo

Tixy do you think I should start paying back £5 a month on top of my interest charge, so if they do ask for it all I could at least say to them I have been trying?

My bank is Lloyds and I also owe £9969 on a Lloyds credit card, which is what I will be throwing every spare penny at (after I clear my Barclay card at the end of the month.)

moneysavingmonkey85

its definately debt, but I do recall feeling differently, at 18 when my student account had a £3k overdraft at 0%, and aside from student loans I had no income. I lived in it, and so did everyone else at uni, so it never occurred to me to think of it as debt. Luckily I don't touch mine now and never paid any interest, but I have certainly changed how I think.

this site and you lovely people helped

Tixy

Woowoo wrote: »

Tixy do you think I should start paying back £5 a month on top of my interest charge, so if they do ask for it all I could at least say to them I have been trying?

My bank is Lloyds and I also owe £9969 on a Lloyds credit card, which is what I will be throwing every spare penny at (after I clear my Barclay card at the end of the month.)

I think that might help if you could. I guess the APR on the lloyds card is probably higher than on the lloyds overdraft but for the sake of a little in interest it could be worthwhile paying that little bit extra to the overdraft.

Woowoo

Thanks Tixy just sent you a PM as well as wasn't sure if you would return to this thread.

The APR on the Lloyds is 16.68% and the overdraft is 12.30%, however I agree it will look better if I am reducing the overdraft a little each month.

I also pay Lloyds a £17 fee for having a platinum bank account, so I expect they quite like me and will want to keep making money off me for nothing!

Thanks for your help.

brokeinwales

I remember when I was moving I was worried that my overdraft would impact on what the bank would lend us, but the attitude of the mortgage advisor stunned me. He said 'oh, don't worry about the overdraft, that's just to help you live, it's not a problem' - and thus we wonder how the world's economy went to sh*t.

Most people pay interest on their overdraft (Halifax are now charging £1 a day for the first £500 or something stupid) so of course it is debt. It is money you have spent without earning it.

I guess the question isn't really whether it's debt or not (of course it is, no matter what people tell themselves!), it's whether it's bad debt or not, and for most people it isn't.

I was finding I was constantly living to the end of my £600 overdraft (but never, ever going over the limit), which suggested to me I could live within my means, I just had to pay the thing back. I'm proud to say that this month, I am now OD free for the first time in about 4 years. I've also cancelled the facility, as I clearly don't need it! :T

I feel good today!

This post is quite a good illustration of my experiences. When my account came "up for review" a while ago (basically they called me in and tried to sell me loads of "financial services") I thought they were going to have a go at me about my semi-permanent overdraft, but they didn't even mention it. When I said that I was trying to pay off my "debt" (i.e. the OD) before I thought about any other plans, they looked at me like I was crazy. At the time I was onlya couple of hundred into my OD, but records should have shown that that was actually a high point in the month!

I guess I've often been one of those people who carries relatively little debt compared to many (on my salary it's difficult to get anyone to lend you much after all!) , and I've proved that I'm capable of *just* living within my means, and I've only once in several years gone over my agreed limit, but I've still often found myself in a pickle. Although I'm slowly chipping away at the problem, and in a better situation than I was - my worry is that if my overdraft was suddenly whipped away from me tomorrow, I'd be b****red - my salary would be swallowed up and I'd struggle to live. Hopefully that won't be the case a few months down the line - but at the moment it's debt of the scariest kind!

I was starting to worry that I was being naive and that I should be saving rather than chipping away at the OD, but the answers to this thread have re-assured me a little, so thanks for that!