Overdrafts - Yay or Nay

anotheruser

When opening a new account, if I am given an option should I choose not to have an overdraft?

I have never been in the red before and don't plan on doing so either. While I appreciate that it raises the "safe than sorry" point, apart from that, is there another good reason to have one?

I don't even know if I have one on the accounts I do have, which shows how not bothered I am about it, because I trust myself not to let the balance slip past £0.

grumbler

If you don't have other credit accounts reported to CRAs, a credit account with an overdraft can help with filling your credit history.

JimmyTheWig

I'm not sure that an unused overdraft would help much in terms of a credit history, would it?


I'd go with the "better safe than sorry" point that you've raised, OP. On the basis that there seems no reason for you _not_ to have one, you may as well have one.
E.g. Account A (no overdraft) low balance as you plan to spend from account B. Account B's computer system gone up the wall and you can't use your card. How do you pay for the weekly shopping and the tank of petrol you've just filled up with?

For some people, having an overdraft may give rise to the temptation to use the overdraft when they don't need to. This can lead to a spiral of debt. For those people the "better safe than sorry" argument might get overshadowed by this. But for you, OP, that doesn't sound like it would be an issue.

grumbler

JimmyTheWig wrote: »

I'm not sure that an unused overdraft would help much in terms of a credit history, would it?

It would if there are no any other account reported, i.e the history doesn't exist.

dalesrider

I'm now working to no O/D on all my accounts. Only one left out of 4
I'm then going to keep balance @ +£50 in them and say £49 is MY overdraft and as such is not going to cost me.