£2000 overdraft and "repayable on demand" concern

Biggs98

So for context, this month I set up a £100 overdraft that I ended up having to use for a rare occasion, but this was feasible as my current account (FlexOne with Nationwide) incurs no charges on overdrafts and I knew I would be debt free in three weeks anyway since I get paid from a weekend job between £150 and £200 a month (depending on the hours I'm set ofc). This meant I didn't have to worry about repayment on demand since ofc I would be paid back within the period of the bank potentially wanting repayment (28 days).

Would going into ovedraft for just under £2000 be feasible for me? I get paid little, there's no way in hell I could immediately service that debt but I usually spend very little and I should be able to easily but realistically go back into black in a year or just over. If they can see I'm putting in more money each month would they still be likely to demand repayment? And how would my current situation as an 18-year old doing an extra year of Sixth Form (starting in September) fit in, would they be more of less likely to demand repayment given that? I don't know if I am eligible for a student overdraft which I know is more relaxed about repayment.

If anyone has any experiences like this I'd be very grateful. Sorry if this sounds a bit dumb

Farcasting

generally speaking its only in exceptional circumstances when a bank will ask you to pay and overdraft back immediately and even then if you explained your circumstances I'm sure you could come to some sort of arrangement to pay back a certain amount monthly to clear it.

Karonher

£2000 is at least 10 times your monthly wage. Do you want to take the risk at 18?

Sanctioned_Parts_List

All overdrafts have the "repayable on demand" thing. The same clause also appears in all other debts - mortgages, credit cards etc.

But... beware. This is exactly how so many young adults get sucked into the credit trap every year.

You currently have income from a weekend job, and possibly a couple of regular outgoings along with all the usual outgoings a young adult would normally have. So you don't really need the debt, but having that buffer below zero allows you to feel that you don't have to worry about specifically when your income comes in, and when your outgoings go out. Because come the end of the month, it will all balance out, right? How relaxing!

In the beginning it will be exactly as you say, a way to decouple the timing of your income with the timing of your scheduled payments. And if you overspend one month, you'll cut back the next, until one month where you're set fewer hours than normal or spend just a bit more than normal, and you don't quite clear the overdraft - oh no, disaster! But actually, world keeps spinning, the sky is still blue and you don't find yourself in a cardboard box under the bridge, so you feel a moment of guilt and promise to do better next month.

Except it never quite happens that way. Another thing crops up that just won't wait, so you carry forward a bigger balance, and then a bigger one until you're bumping along the bottom of the overdraft limit, and with your wages barely making a splash when they land.

On this path lies consolidation loans, credit cards, balance transfers, buy-now-pay-later deals, pay day loans... constantly robbing Peter to pay Paul and every month chasing one repayment after another, every month living on the leftovers after everyone else has had their pound of flesh.

Debt is a very powerful tool if planned and used well. But getting access to debt without a plan is risky. Are you quite sure you want that overdraft?

upoiupou

From your post it sounds like you have an arranged overdraft amount of £100. Are you talking about asking Nationwide to increase your overdraft allowance to £2,000? I doubt that they would do this.

If you're thinking about going beyond your arranged overdraft limit - don't even consider this! I'm not sure if the FlexOne account would carry any charges for an unarranged overdraft but I don't think Nationwide would let you overdraw to that extent. If it wasn't arranged, I think they would bounce your transaction/s. If some had already gone through over the £100 allowance they may ask for immediate repayment of what's already owed.

I don't think you have the option of borrowing that much money from Nationwide, it's too high a multiple of your income (more than 10x). I wouldn't want to get into that level of debt even if it was available.

Is there any way you can wait a year and save for what you want to buy, perhaps shortening the waiting time by getting another job during the holidays?

sourcrates

Best advice I can give you is try and live within your means without resorting to using an overdraught.

Lots of people your age get suckered in, then either have there hours cut, or lose there job, then they can't repay the OD.

Best to avoid altogether !!

DCFC79

Don't touch your overdraft is my advice.

Can you not do extra hours at work to pay the OD with Nationwide off ?

spadoosh

Plenty of experience with this.

Presumptuous on my behalf but my advice would be do not buy anything that isnt offering a return on your investment. You are too young and do not earn enough to spend your annual salary on something that does not give you a direct return.

I doubt you would be given a £2000.00 overdraft with your earnings and education status (student overdrafts are generally aimed at university students).

They can and do pull overdrafts. They normally have a 'suitable' product ilned up which will make it less expensive than the unauthorised overdraft fees but more expensive than saving or more conventional borrowing.

Generally overdrafts are for short term (less than 1 year). Loans are for longer.

If you want to save yourself getting caught out it would be well advised to stick around on these boards so you can see the mistakes people fall in to.

Not questioning your intelligence but i strongly feel that the majority of people are not educated to a decent standard with money. Or more specifically, not educated with day to day money and living.