overdrafts and interest charged - can someone explain please?

dooverylittle

Hi all

Me and the hubby are currently trying our hardest to reduce our overdrafts (and debt in general) But our overdrafts are confusing us!!

Last month, when the interest went on to my bank account, I was only £450 into my overdraft and i was charged £13. Yet this month, i was £950 into my overdraft and I've only been charged £8.

I don't understand this at all, please can someone explain it to me??

Thanks:cool:

Lokolo

Who are the accounts with?

Different banks have different charging structures.

It also depends how long you were in OD for, not the amount. i.e. a £2000 overdraft for 1 day will be cheaper than a £500 overdraft for 2 weeks.

taka

It is probable that you are paying the interest a month or so behind, eg paying interest for March in April. It is certainly the case for my bank...

The info will be buried in your account Terms and Conditions somewhere as to when they charge you. Different banks do vary how and when they collect interest so maybe check with your bank how and when they apply it. The info may be on their website too.

opinions4u

dooverylittle wrote: »

Last month, when the interest went on to my bank account, I was only £450 into my overdraft and i was charged £13. Yet this month, i was £950 into my overdraft and I've only been charged £8.

I'm with Taka.

I think the £8 relates to the £450 overdraft and you will probably see a charge of around £17 popping up next, relating to the £950 overdaft. I'd hazard a guess that the £13 charge came from a £750ish overdraft the month before.

Without knowing the bank, the account type and the date and balances after each transaction it's impossible to say for sure though.

ajharris

dooverylittle wrote: »

Hi all

Me and the hubby are currently trying our hardest to reduce our overdrafts (and debt in general) But our overdrafts are confusing us!!

Last month, when the interest went on to my bank account, I was only £450 into my overdraft and i was charged £13. Yet this month, i was £950 into my overdraft and I've only been charged £8.

I don't understand this at all, please can someone explain it to me??

Thanks:cool:

As with all banking contracts the devil is in the detail. Take a closer look at your terms and conditions, if having done this things are no clearer then I would suggest contacting the bank so that you know exactly what you are paying for.

It may be worth considering an account that gives you a free overdraft so that when you gradually start reducing your overdraft you will stop incuring charges that much sooner. I think that First Direct offer a £250 interest free OD. All the best.