Can anyone explain how an overdraft works?

JimmyTheWig

CLAPTON wrote: »

It's essential to establish a small savings buffer so you don't need to borrow

I totally agree with Clapton's post - that an overdraft can be dangerous - but until that small savings buffer is in place then an overdraft is a sensible thing to have as a buffer.

SandA wrote: »

Why would it be withdrawn before 12 months? I presume that is in circumstances such as breaking terms and conditions on my behalf / exceeding limits etc? or am I wrong.

Because it's their money. They might want it back.
Generally they won't if they think you're being sensible.
The point is that you can't use an overdraft by assuming that the overdraft will always be there.

CLAPTON

if you read the T&Cs of an overderaft you will find that it can be withdrawn at any time.. so quite different to a loan or even an credit card

BugsyBrowne

Overdrafts only get made repayable on demand when the banks sniffer dogs get a certain scent like wages stop going in, monthly feeds from CRAs look dodgy all of a sudden, cheques or direct debits bouncing etc.

SandA

When I went to apply it said 'there may be taxes and other costs not taken by Barclays through using this facility' or something like that. What does that mean?

JuicyJesus

SandA wrote: »

I probably described my circumstances differently to what they are. We do go to our family occasionally, when were short the odd £10 for a bill. We arent bill junkies by any means, but sometimes found ourselves slightly short a few days before paydays etc.

Most people who end up living in their overdrafts wind up "slightly short a few days before payday", and after a few paydays they have an expanding debt.

eschaton

A lot of good advice for OP in this thread.

Currently you see your target end balance before payday as £0. If your available balance becomes -£750 then there is every chance that you will see this as your new target then it could snowball from there. Especially if it ever withdrawn and you find that you can't pay it back quickly.

As per other advice, look at your outgoings using a SOA and cut out the waste then start saving. My budget is very strict and I have reduced it again this year and that is despite having just over £20k in the bank if my credit cards were paid off.

There is probably plenty you can cut back on and the savings will be big if you follow and keep to a strict budget.