overdraft cut

MABLE

takman wrote: »

Why would you want such a large overdraft that you never use?. Overdrafts are very poor ways of borrowing and the only reason someone would need to use an overdraft is due to poor financial managment.


By having such a large overdraft and using it you are reducing the chance of you getting useful credit such as Cashback Credit Cards.

As I said I do not pay anything when I use it. Its a useful facility to utilise because of my external accounts. Also I have the best of credit cards and they always offer me promotional rates and the last one offered me 0.9%fee and 0% for 14 months.

BTW I have two cash back Barclaycards.

GingerFurball_2

It always amuses me how bothered some people get when this happens.

Ben8282

I think a lot of replies to this thread have been unduly critical.
It is perfectly understandable why somebody would be annoyed at a massive cut in their overdraft limit in the same way as they would be if a credit card provider suddenly reduced their credit card limit by a similar amount.
As to why somebody would want a (large) unused overdraft facility, the obvious reason which comes to mind is the security that, whatever happens, no direct debit will be unpaid or cheque bounced as a result of any unexpected occurrence. Also, a high overdraft facility never used would also give potential lenders peace of mind that their direct debits will be met.
I do agree that £10,000 is a bit high; I have always felt that a facility approximately equal to the net monthly income paid into the account was reasonable and appropriate.

takman

Ben8282 wrote: »

I think a lot of replies to this thread have been unduly critical.
It is perfectly understandable why somebody would be annoyed at a massive cut in their overdraft limit in the same way as they would be if a credit card provider suddenly reduced their credit card limit by a similar amount.
As to why somebody would want a (large) unused overdraft facility, the obvious reason which comes to mind is the security that, whatever happens, no direct debit will be unpaid or cheque bounced as a result of any unexpected occurrence. Also, a high overdraft facility never used would also give potential lenders peace of mind that their direct debits will be met.
I do agree that £10,000 is a bit high; I have always felt that a facility approximately equal to the net monthly income paid into the account was reasonable and appropriate.

I disagree with that bit, I would say lenders are likely to consider it unused credit and it will go against any applications you make for further credit. They will take into account the overdraft limit when deciding whether or not to accept a credit application and what limit they will offer.

No lender is going to be happy with someone paying off their credit card direct debit for example by borrowing from an overdraft. That signifies the start of a large build up of debt and makes it more likely the person will default in future.

Dalavich

I can understand the upset. I have a credit card with £5000 limit on it, as I've not used it, they cut it to £500.

Which is ok, as I don't need it. However, what happens if the car fails its MOT and I need £1000 urgently to get it passed?

If you have an emergency facility, it's there for an emergency and you don't expect the rug to be pulled from under your feet when you need it most!

takman

Dalavich wrote: »

I can understand the upset. I have a credit card with £5000 limit on it, as I've not used it, they cut it to £500.

Which is ok, as I don't need it. However, what happens if the car fails its MOT and I need £1000 urgently to get it passed?

If you have an emergency facility, it's there for an emergency and you don't expect the rug to be pulled from under your feet when you need it most!

You really should have an emergency fund setup to deal with unexpected bills. You also should have money put aside for car maintenance. If your only source of emergency funds are credit cards then your finances desperately need to be sorted out and you should start saving up immediately.