Two bank accounts- how do I set it all up?

MissShoes

Hi all,

I wonder what you all think I should do about this:

Basically I have been doing really well recently with my debt busting, and thanks to some amazing friends who have allowed me to use their 0% credit facilities, I am now ONLY around £9.3k in debt as opposed to the 20k I started with in January 2008.

One debt that hasn't reduced at all however, is my overdraft. This stems from my student days, and once I graduated from my bachelors, the limit was set as 2000. Now given that I immediately studied a postgrad degree, I seemed to slip under the net in terms of paying interest. In fact, it's only in the last year (5 yearsafter graduating) that interest has begun to be applied.

One thing I picked up on is how deflating it is to never 'see' your wages materialise in your bank account.For example, the day before payday I am always -2000.00! Then my wages go in and I see +300.00. Then all my outgoings come out, debt repayments etc and I've left with -1700.00!!!

What I thought was I need a basic bank account with no overdraft so I can see MY money and I can treat the OD on the other account as a debt, just like all the rest- by sending a monthly payment.

So I've opened a bank account with my local credit union. I suppose my questions are...

1) if I had my wages paid into my credit union account and no banks could see my wages being paid in their accounts, would that harm me/my credit rating/my future mortgage chances etc, that I opted out of the 'banking' system?

2) which should I have my wages paid into?

3) should one be set up as a bills account, with rent, utilities, council tax, home ins and tv licence coming out of it? if so, which one?

4) then- should all my 'house' outgoings come from one account and my 'me' outgoings such as car insurance, debt repayments, sky etc come from another?

or should I just stop overthinking it!!! and have wages into credit union account, all outgoings come out of that account, including a standing order into my bank account to clear the overdraft.


Feeling frazzled and confused- but I suspect this is my own doing!!!:p

Help!

Love,

Shoes

xx

randomer

I'm watching out for replies as I have a similar question. I have a permanent OD with Lloyds TSB whom I loathe. I was thinking about opening another account with another bank and treating the OD as a debt to be paid off. Obviously it is a debt just with a different name!:mad:

Sorry OP no words of wisdom.....hope somebody can help.

MissShoes

randomer wrote: »

I'm watching out for replies as I have a similar question. I have a permanent OD with Lloyds TSB whom I loathe. I was thinking about opening another account with another bank and treating the OD as a debt to be paid off. Obviously it is a debt just with a different name!:mad:

Sorry OP no words of wisdom.....hope somebody can help.

I hope so too! I'm thinking it might be simpler to have nothing coming out of or going into the bank account except a monthly payment to pay off the od.

randomer

please somebody?:p

MarsdenCuckoo

Sorry, don't know anything about Credit Union accounts but is there any chance of taking out a loan and/or even better a balance transfer (you'll be charged a one off 2.5/3% fee) at 0% interest rate to a credit card to pay off your overdraft and then you can 'start afresh' working out a budget to deal with your monthly outgoings out of your salary?

KPR11

I similar thing, I mostly banked with Natwest with whom I have an OD of £1,000 which I was constantly using.

About a year ago I opened an account with Barclays and had my wages paid there.

Every month I have been writing a cheque to myself for c30 - 40% of my wage (I didn't want them to recall the OD, wanted to maintain relationship and show at least some activity. Plus, that money would be the last amount I would use and as such it's that much less interest I am paying whilst treating the OD as a debt if it makes sense?) and deposit it in my Natwest account. The reason why I have opted for a cheque is I feel that they are less likely to realise that I have been naughty and totall moved away from them (or am I kidding myself).

I also make sure that there is a certain amount of the deposit that remains in the Natwest account i.e. the OD gets paid off. So for eg say I have maxed out my OD and in the first month I have set myself a target of paying off £50 to £125 pm so I could pay in say £500, most of it would sit there till the middle of the month (hence am only paying interest on £500 for half the month, the money saved does make it worth it) and then I would only use between £350 to £450 of the deposited amount. So at the start of month 2 after I deposit another £500, I should only be overdrawn between £375 and £450 and the cycle continues.

I will stop waffling now

MissShoes

MarsdenCuckoo wrote: »

Sorry, don't know anything about Credit Union accounts but is there any chance of taking out a loan and/or even better a balance transfer (you'll be charged a one off 2.5/3% fee) at 0% interest rate to a credit card to pay off your overdraft and then you can 'start afresh' working out a budget to deal with your monthly outgoings out of your salary?

It's a normal bank account with a visa debit card, direct debit and standing order capacity etc. NO WAY would I take out a loan! Not interested in applying for credit- I just want to clear what I've got and I'm trying to work out how to set up the bank accounts/direct debits for bills etc.

MissShoes

KPR11 wrote: »

I similar thing, I mostly banked with Natwest with whom I have an OD of £1,000 which I was constantly using.

About a year ago I opened an account with Barclays and had my wages paid there.

Every month I have been writing a cheque to myself for c30 - 40% of my wage (I didn't want them to recall the OD, wanted to maintain relationship and show at least some activity. Plus, that money would be the last amount I would use and as such it's that much less interest I am paying whilst treating the OD as a debt if it makes sense?) and deposit it in my Natwest account. The reason why I have opted for a cheque is I feel that they are less likely to realise that I have been naughty and totall moved away from them (or am I kidding myself).

I also make sure that there is a certain amount of the deposit that remains in the Natwest account i.e. the OD gets paid off. So for eg say I have maxed out my OD and in the first month I have set myself a target of paying off £50 to £125 pm so I could pay in say £500, most of it would sit there till the middle of the month (hence am only paying interest on £500 for half the month, the money saved does make it worth it) and then I would only use between £350 to £450 of the deposited amount. So at the start of month 2 after I deposit another £500, I should only be overdrawn between £375 and £450 and the cycle continues.

I will stop waffling now

I see what you mean- you put your spends as well as your payment into that account so it still shows activity? That might be worth a go- although I'm really interested in using an account where the lowest my balance can go is 0!!!

KPR11

MissShoes wrote: »

you put your spends as well as your payment into that account so it still shows activity?

Something like that, its mostly my payment and some spends usually £200 - £250 max

MissShoes wrote: »

although I'm really interested in using an account where the lowest my balance can go is 0!!!

That would be your Credit Union account where initially about 70% of your spends take place and then 100% once you have paid off your OD.

Rem ODs are payable on demand so you don't want to take everything away from them and risk them recalling your OD, if it makes sense!

MissShoes

KPR11 wrote: »

Something like that, its mostly my payment and some spends usually £200 - £250 max



That would be your Credit Union account where initially about 70% of your spends take place and then 100% once you have paid off your OD.

Rem ODs are payable on demand so you don't want to take everything away from them and risk them recalling your OD, if it makes sense!

I didn't even realise they could recall the facility if you stopped paying into it?

Ok- so I should transfer all incomings and outgoings to my new bank account with the credit union.

Then, money which is for my personal spends plus the overdraft payment should be put into the OD account?

Ta

Shoes

xx

KPR11

MissShoes wrote: »

I didn't even realise they could recall the facility if you stopped paying into it?

I had kind of known that it is but this thread just confirmed it(https://forums.moneysavingexpert.com/discussion/2333973

MissShoes wrote: »

Ok- so I should transfer all incomings and outgoings to my new bank account with the credit union.

Luckily I don't have that many direct debits so it was a case of just transferring my salary and a couple of many DDs to my new account.

MissShoes wrote: »

Then, money which is for my personal spends plus the overdraft payment should be put into the OD account?

That is kind of what I do, the amount I transfer is based on 3 things. 1. I calculate how much OD I can afford to pay off as a minimum that month 2. What my DDs on that account are and then 3. Approximately half my personal spends and irregular items / bills (not on DD).

Have a read of the thread there are interesting things mentioned by DV and DC.

Hope it helps