Overdraft or savings?Help please!

lonelyinlondon

Hi everyone!

I am back on this site after a while stumbling by the wayside. I am really enjoying reading the DFW posts. Thanks, they are inspirational!

A quick question: I have an overdraft with HSBC of about £600 (and go up to that every month!). I also have £1650 savings with Halifax.:T I am not sure of the interest rate on the overdraft. I am still in shock being charged anything at all as i used to get an interest free student overdraft but that has run out! Have also been bitten twice for 2 £25 charges for going over my limit. They didn't do that with the student account! Oh dear!

Anyway, what do you all think? Should i pay off the overdraft bit by bit or the whole lot out of my savings now? I am already in overdraft and pay day os the 26th August. I am worried that if I pay the money in now i will just spend it and end up in the same predicament as now!

Thanks in advance

PS I should change my name to Notsolonelyinlondon!:money:

james32_uk

Pay it off and cancel your overdraft.

BWZN93

james23_uk wrote: »

Pay it off and cancel your overdraft.

What he said!!

lonelyinlondon

But if I cancel my overdraft I might accidentally go over it and get charged £25 again! Self discipline is required I hear you shout!

normdeplume

Wot m'colleagues said.

If you keep a spending diary at least you'll know when you're about to go into the red.

lonelyinlondon

Thanks guys that seems to be a pretty definitive answer! I also have a couple of hundred on my Virgin card. Should i go for it and pay that off too??

Thanks

HairyHandofDartmoor

Pay off your overdraft and the cc unless it is 0%. Then don't buy anything unless you have the money (I know it's not that simple and if we'd all done that none of us would be in debt now!) But it is still good advice. Learn from us before you become as bad as we are!

Lizzy

Pay it all off and ask them to leave your overdraft at £50 then pretend that you have not got it.

david_hellier

I'm afraid overdrafts are becoming a bit of a nuscience.

The only way to control them is to follow a budget and allow an amount in the budget towards the od and its fees. If this is not done then you will always be bouncing along on the od limit with all its penalty disadvantages. As you say cancelling the od is not necassarily the answer as you are still penalised.

As a rule it is not logical to have savings and debts (unless the debt belongs to an appreciating asset eg a house).

Put up your soa and lets take look before you pay it off.

lonelyinlondon

Well before I logged in this morning and found David's request I had hot footed it to Halifax! I have paid off the overdraft and plan to leave £100 of it free. Have also paid off the virgin card. The only debt i have now is £151 a month for my sofa. Unfortunately my mortgage, service charge and council tax comes to £700 a month but I should be ok.

I think psycologically I feel better knowing i don't have the overdraft so that should help me to be a bit more disciplined with my spending.

Will keep you posted! Thanks for your help.

HairyHandofDartmoor

I think you have made the right decision. Now you have to be very careful with your spending, draw up a budget and make yourself stick to it, and you shouldn't build up the overdraft again. If you budget really well then you will be able to build up your savings again!