Overdraft...keep it or get rid?

jmcg

Hi everyone, I've been looking at this site and found it is really good for advice on money. I've got a little question which I'm hoping someone might be able to help with.

I am relatively debt free I think. I am 22 and work at a company where we have just been bought out and all staff are to recieve in a way, a bonus. The company is a plc and when i joined i recieved shares, with shares being added on for each year i work there. long story short, I have an option to sell my shares due to the takeover, which I am going to do. I am going to get about £1.5k for the shares.

Now I have an overdraft with Lloyds TSB which has been the bane of my existence for a few years, I have probably paid it off in overdraft charges over the years. This overdraft is constantly at £1,500 and I am regularly going over.

So what I am planning to do is use the money I am getting for these shares and use it to solve my overdraft problem.

What I would like to know is whether I should pay the overdraft off and change banks (which I have wanted to do for a long time, I day dream about going into my bank and telling them where to go!) I have heard Santander are doing a good deal for new customers (anyone got any experiences?).

Or should I keep the account open, keep the overdraft despite the fact I wont be using it and use it as emergency money for example. I am on a graduate account so I am not paying for the overdraft at the moment but I think that could change.

I am wary about basically cutting the overdraft off and then one day being in need of money quickly and finding myself in trouble. Will the overdraft affect my credit rating?

CH27

Personally I wouldn't touch Santander with a barge pole.

I would pay off the overdraft & cancel it so you cannot build it back up.

Do a SOA & sort yourself a proper budget for each month.

[Deleted User]

Get rid of it - you don't need it and it's costing you. You have also realsied that once you're in your OD it's difficult to get out of it again.

Try, as said by CH27, of keeping a budget, so that your expenses don't increase above your income, removing any need for an overdraft.

I've personally never had a problem with Santander (although I've never had a current account with them), but there are many compalints on this webpage (and others), especially about their lack of communication with customers and poor customer service.

Have a look on Martin's main webpage under the "banking and saving" section and find an account that suits your needs:

http://www.moneysavingexpert.com/banking/

D9

dreamdreamer

I used to be with Santander and also wouldn't go back to them if you paid me. Shocking customer service.

Whether or not you change banks is really personal preference, but definitely cancel the overdraft facility. It's SO easy to slide back into it, trust me I paid mine off 3 times and every time wound up back at my limit within a year, despite all my promises to myself. The third time I cancelled it and now at the end of the month when I want to do or buy something, but the money isn't there, I simply don't do or buy it! Eventually you learn to budget properly so that you have money left at the end of the month, because you don't have the "backup" overdraft.

beanielou

I wouldent advise you go to Santander.