Overdrafts - what is the point?

Puddylove

Hi all
I've never understood the point in overdrafts.

I'm just curious so;

Do you have an overdraft - and what do you use it for?

Do you have any regrets?

P x

elsien

I have an overdraft facility.
I think it's been used once in about 10 years when I miscalculated and transferred too much out of the account.
I keep it as a safety net so I don't get hit by ridiculous charges if I accidentally go a couple of quid into the red.

JimmyTheWig

It's a flexible way to borrow money.
Better to have an emergency fund so that you don't need to borrow money.
But not everyone has managed to build themselves an emergency fund before they need one.

GoldenShadow

I rarely use mine. Its there for emergencies. In case I have to whack vet bills on a CC etc. The OD has a better rate than CC currently etc. It is for unforeseen expenses, not used for monthly catch up etc.

Pixie5740

I do have one and have used it a couple of times when I was late being paid. So it's more of a cash flow thing for me.

Thrugelmir

Lenders prefer consumers to use credit cards. As generates more revenue. Overdrafts pre-date credit cards. Back to days when banking was more relationship based.

sourcrates

I have a £500 OD offered as part of my First Direct current account.


Its a really low interest rate, I pay around £1.60 per month, should I choose to use it.


The first £250 is interest free, you only pay interest on the next £250.


When you look at other banks rate of interest, for example Halifax, they charge £1 a day, for everyday your overdrawn, that can cost you £30+ a month to use, which compared to mine, is completely bonkers.

Ian_875

I more or less lived in mine as a student. It was 0% though.

The job I worked just say paid enough to cover my rent and bills and whatnot, the overdraft was for general expenses. It was cleared within 2 months of leaving uni and getting a proper job though, not been back in since.

Puddylove

I'm interested that you all seem to have them (well, overdraft facility) but not use them.

I don't have one. In my head (a strange place, admittedly) they remind me of Spinal Tap's amplifier which goes all the way to 11. .

So your bank account goes all the way to -1, if you follow?

P x

sourcrates

Puddylove wrote: »

I'm interested that you all seem to have them (well, overdraft facility) but not use them.

I don't have one. In my head (a strange place, admittedly) they remind me of Spinal Tap's amplifier which goes all the way to 11. .

So your bank account goes all the way to -1, if you follow?

P x

Oow spinal tap, not so far off base as I thought puddy lol

Nimmi

I guess its a safety net for some people, if they accidentally overspend or it covers them when they are waiting for funds to be paid into their account. I have not used my overdraft facility in years as I manage my money better now, although when I was in Uni I was always in my overdraft like it was free money (terrible i know).