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

Redbedhead

I consider an overdraft debt. But then I also consider a mortgage to be debt and a lot of people don't.

barbiedoll

Of course an overdraft is a debt, it's basically one loan that never ends, and that is exactly why the banks are so keen for us all to have one. They are sold as a "must-have" product and people are made to feel as though it is a special privilege that has been earned, along with their "platinum" bank account (i.e one that costs you £15-20 per month) and their "benefits" (ski insurance anyone?) We've been living on our overdraft for as long as I can remember and when I count up all the monthly charges for the account alone, it makes me feel ill. Not to mention the charges for going over our limit. :eek:
I would advise anyone who has an overdraft to pay it off as soon as they possibly can, also, if you are paying a monthly charge for your account, change to one with no fee, if you have to change banks, then do so. Every penny in overdraft charges that we pay is less money being spent on the high street, the banks then siphon off their vast profits into their offshore companies and as a result, the whole country suffers. I will never have an overdraft again and hopefully, when our debts are paid off, we will be able to save and plan our finances accordingly. I think that the banks have had enough of my hard-earned cash over the years, why give them any more? :mad:

RAS

I would agree that your debt is whatever you OD is the day before your salary goes in.

And how important that is depends on what charges you incur and on the ratio between your debt and your monthly income.

At least you are going into the black for part of the month. A lot of people do not even manage that.

niccatw

Tixy wrote: »

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.

HBOS did this to me... while the account was going in and out of credit, they weren't worried. As soon as I moved banks and they realised I wasn't paying in a significant amount each month, I got a letter reminding me the terms and conditions of the account stated I had to pay in £x per month. As soon as I'd paid that o/d off, I closed the account. Phew!

brokeinwales wrote: »

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 think the banks view on it changes drastically depending on how you are managing it! HBOS made it as awkward as possible for me. Co-operative agreed to reduce my o/d by £20 a month until I got rid of it, which really helped as cutting £20 a month was more achievable than paying it in one go.

I do like a little safety net though in case I forget the date of a direct debit or send some-one a cheque and I don't know whn they might cash it. Both of those things are much more rare since I become an obsessive MSEr

elsie52

I definitely consider an overdraft to be debt......we had an overdraft for years and couldn't get rid of it...Its so easy to spend, knowing that you have the "back up" of an overdraft.

We are now on a DMP to get rid of our debt, and our new bank account is a basic....no overdraft....so therefore we live without ever considering going overdrawn.

immoral_angeluk

gonzo127 wrote: »

i think the view on overdrafts is a dangerous one but not uncommen, i find that someones view on a overdraft shows how much they actually understand about debt

someone who doesnt see an overdraft as debt usualy has minimum understanding on finances

someone who sees the overdraft as debt is usually someone who has a handle on money

Completely agree.

AfterDark

I never used to consider my OD debt, used to live in it and sit about 2300 in the red.... Untill I got a letter from the bank advising they were cancelling it within 30 days and I had to pay it back within that time Now I choose to have a really small overdraft that would just cover the odd surprise bill

zarazara

Yes, I do consider the overdraft as debt. Any money I have spent which I do not have I call debt,this includes mortgage. Overdraft,loan,mortgage,all debt.

brokeinwales

Of course an overdraft is a debt, it's basically one loan that never ends, and that is exactly why the banks are so keen for us all to have one.

I guess that's where the myth of "it's not proper debt" comes from- the banks attitudes. Same as they also love us having savings and debts at the same time and are very keen on selling the idea of a "safety net" or investments to people whose first priority should really be paying off their credit card bill.

KPR11

I have an OD (£1,000) and like some people mentioned, I lived off it till recently, every month my salary would go in and take me out for a week max and then I am back to the usual ending the month close to my limit.

I always considered it a debt and I have now made it a point to clear it in the next few months (as you can tell from my sig). I am going to keep it in case I need it.

Tixy wrote: »

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'.

This is rather worrying for a couple of reasons:

1. I have had the OD for nearly 4 years now (with Natwest) but never had an annual review or any review (my limit has always been the same).

2. I made a decision to open a new account (with Barclays) so that I could start paying off the "debt". My salary is paid to Barclays account and I transfer about £500 to the Natwest account to minimise the interest cost. I can only afford to reduce it by about £50 pm so towards the middle to the end of the month (when I have used up all the money from my Barclays account) I start using the OD again. By the end of this month I will have paid off c£150. How likely are they to recall the OD? If they do then I will be screwed.

I am sure I can claim back PPI from them (had a loan with them and was told that I wouldn't get the loan without taking out the PPI) but I decided to wait for a while till I paid off the OD (in case they recalled it).

Apologies for hijacking your thread BIW and the rather late post to the thread but just seen it!!

Thanks,

KPR