Snowballing and Halifax Overdraft

weebit

Hi everyone.

I am currently using the Snowballing calculator on whatsthecost.com, but i don't know how best to input the overdaft i have with the Halifax into the calculator. They charge £1 a day regardless of the amount in there (under £2500). My balance is currently £2499 and will not rise above the £2500 threshold.

Any ideas?
Thanks

Tixy

Is this still the current account you use? Are you overdrawn for the whole of the month? So £30 each month (approx). If so then at the moment its roughly 14% APR., but obviously the more you pay off the higher the effective APR is (ie at £1000 all month it would be an apr of 34%). There is no ideal way to build in into the existing snowball calculators. I think you need to either leave it out or fudge the figures somehow - maybe put in an averaged APR and put the minimum repayment as £30 a month?

weebit

I do not use this current account anymore, I have one with Natwest with no over-draft or other credit facility. I only ever pay in what the interest is each month (i.e. £30 or £31 depending on how many days in the month). because there is no financial incentive in the short term in paying any more off than this

I suppose it would be best to just leave it out of the calculator completely since it has an ever-change effective APR. My plan with this account anyway is that it will be the last interest-charging account i pay off. when all my other credit cards etc have been paid off, I will put what would have been my payment to Halifax into an ISA or other savings account, earn a bit of interest on it and when the total is £2500 i will put that all into the overdraft and close the account.

blisteringblue

The way banks are now though don't you have to pay a minimum in each month to retain any preferential overdrafts. Don't you risk them coming after you for the whole overdraft in one go as they can do?

I have one with Santander which I pay in the minimum, pay a few bills and take most of it straight back out. Means I get their 50p a day preferential rate capped at 15 days. Means I get the overdraft money for about 3% apr ?

I might as well use it, as it helped some of my 20+ % snowballs ?

Must admit they only just switched to this, which costs those who only go overdrawn occasionally more money, but a constant overdraft actually costs less. I just make sure I pay the minimum required to retain this.

weebit

I've been paying Halifax only the interest for over 3 years and I've always got a letter each year saying they have reviewed my overdraft and I can keep the full limit i currently have (£2750).

weebit

argh! just noticed another anomaly! Capital One's minimum payment is the great er of:

- £5
or
- 1% of the balance + that month's interest.

how on earth does that fit into the snowball calculator? These banks don't make things easy for us do they? grrrr

blisteringblue

weebit wrote: »

argh! just noticed another anomaly! Capital One's minimum payment is the great er of:

- £5
or
- 1% of the balance + that month's interest.

how on earth does that fit into the snowball calculator? These banks don't make things easy for us do they? grrrr

Don't worry about it, when you come to update it after you get your statement it works out what it thinks your payment will be, but you just overtype the amount from your statement. You just have to make an educated guess at the start when setting it up.

The snowball is basically just as estimate. As the months build up you get what has been paid accurately and your snowball estimates for the coming months.

Tixy

Just put it in the second option - So if your APR is 24% then put in 3% (24%/12 is 2% for the interest + 1% on top), if the APR is 19% then its 2.58% etc.