Overdrafts - what is the point?

ProudDad

I use mines just before payday it is interest and fee free though and only for £100 so just there if I need it if I was paying for it though I would be getting rid.

Puddylove

ProudDad wrote: »

I use mines just before payday it is interest and fee free though and only for £100 so just there if I need it if I was paying for it though I would be getting rid.

A Scot if I'm not mistaken?

P x

takman

I hate overdrafts because they add on to your available balance. If you don't have an overdraft your available balance simply shows what you have left after all recent card payments that haven't been processed yet.

So for this reason I always reject overdraft offers on my accounts.

Westie983

Lived in my overdraft when I was a student as it was 0% and I put it into my isa at 4.5% at the time, then when I graduated I had 5 years to pay it off, staggered each year. I have just finished paying it off so that was 2k interest free for seven years....


I now only use my overdraft as a way to fund my current accounts as the money comes straight back in at the end of the transfer and it makes its easier to use the account with the extra 2k in it.

Overdrafts do cause problems though if you don't keep an eye on the balance and the fees attached.

As mentioned there are some bank accounts which offer a interest free OD of a certain amount, could be useful if you keep an eye and don't go over.

Hermia

Pixie5740 wrote: »

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.

Same here. I had an employer who bodged up the wages a couple of times. Whilst they did refund any charges it was a lot of hassle so easier to just have the overdraft as a safety net. I don't use mine, but given it doesn't cost anything if you don't use it it seems a good idea in case I do forget a DD or something like that.

ProudDad

Puddylove wrote: »

A Scot if I'm not mistaken?

P x

Was it that obvious?

determined_new_ms

I haven't had an overdraft facility since 2011. We became debt free (ther first time! Now we have a family debt) in October 2010 and once I had saved the same amount as the od I closed the facility.

It was weird at first as I had had an od since starting uni in 1999 and I did feel a little anxious about not having that safety net. But it turned out I needn't have worried as I haven't missed it or needed it at all

TheBanker

I've always had one but don't really use it. It's there for emergencies.

A few months ago my dad was taken ill and I had to fly overseas at very short notice, and incurred a lot of expenses e.g. accommodation, food. When we got back to the UK my dad was in hospital and I had to pay some of his bills and expenses for him. I could have covered most of this from savings but I was very grateful to have my overdraft as I wasn't having to mess about doing transfers while overseas.

Reya

I've had an overdraft for my entire working life. When I was younger (and more silly with money) I pretty much lived in it. Back then it was a £700 overdraft. Then I reduced it to £500 and for the last 25 years or so it's just been there as a safety net in case of account-related emergencies. I think in all that time my balance has only dipped into it twice, usually when something 'went wrong' with my account (payment taken twice, wages paid in late, etc.) and never to more than the tune of about £50 for a day or so.

Originally it was what the bank called an 'arranged overdraft' and - if I went into it - I wouldn't be charged. These days it appears that option has now been withdrawn and the bank would charge something like 19% interest if I went into it, so I'll probably close it soon.

The_Pink_Scarf

I'd like to see it treated with the same contempt as taking out a payday loan.

TPS