Hate being overdrawn should I use savings?

edited 30 November -1 at 1:00AM in Budgeting & Bank Accounts
12 replies 2.8K views
hrj2922hrj2922 Forumite
21 Posts
Fourth Anniversary 10 Posts
edited 30 November -1 at 1:00AM in Budgeting & Bank Accounts
I am with first direct and get a £1000 overdraft, £250 of which is interest free and the rest is 15.9% or something.. I'm currently about £400 overdrawn, am owed some money (£50), have some clothes to return to a store (£40) and will be getting some from switching my other account to co op (they give £110 or something if you switch) so that will make it so I'm only £200 overdrawn so no interest, however I still have about 16 days til payday so inevitably will be using more of it. I can't work out when and how much interest i will be charged for the overdraft? If the first £250 is free, say I go overdrawn by another £200 that i pay interest on, what do I pay and when??

I do have £600 left of some money I was given (which I have burned through too quickly as I moved city and use a fair bit to buy stuff for the house and keep myself going between jobs when I moved) and this is my 'emergency money' in case my dog gets sick(shes insured so I should get it back if she did)/my car has a problem etc. But would i be better off just getting myself totally out of my overdraft with this, then budgeting my pay so i don't get back into my overdraft and trying to save some of it? I just hate the thought of not having 'back uo' money in a savings account, but i also hate being overdrawn. I'm 23 and house sharing and going back to uni in september as a mature student so I know I can't expect to be saving heaps but i just stress about money a lot. Any advice would be great, thank you!
«1

Replies

  • YorkshireBoyYorkshireBoy Forumite
    31.5K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    ✭✭✭✭✭
    Use your savings to clear the overdraft. The overdraft facility is your emergency fund until you've built your savings account balance back up. Maybe you'll think twice about spending money you have to pay for!
  • Clear the overdraft with the savings in total, use the interest-free element until payday for essential spending and/or the amounts you are expecting are coming in. Top up the savings later on when you can. Your interest on your overdraft will be higher than what you receive on the savings.
  • DCFC79DCFC79 Forumite
    40.3K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    ✭✭✭✭✭
    Stop lending money.
    Only buy what you need/what you can afford.

    Get a handle on it now before it balloons out of control.

    Yes use your savings to clear the overdraft.
  • Ben8282Ben8282
    4.8K Posts
    1,000 Posts Combo Breaker Newshound!
    ✭✭✭✭
    As the interest payable on the overdraft will exceed the interest received on the savings it is obviously preferable to pay off the overdraft.
    Also being constantly overdrawn on your current account looks bad,
  • getmore4lessgetmore4less Forumite
    44.1K Posts
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    ✭✭✭✭✭
    you don't have savings.

    you have borrowed money to make it look like you have savings.
  • mwarbymwarby Forumite
    2K Posts
    Part of the Furniture 1,000 Posts Name Dropper
    ✭✭✭✭
    Sounds to me like you really need to budget. Clearing the overdraft with savings does sound sensible, but not if in a few short months your in the same place but no savings
  • agrinnallagrinnall
    23.3K Posts
    ✭✭✭✭✭
    mwarby wrote: »
    Sounds to me like you really need to budget. Clearing the overdraft with savings does sound sensible, but not if in a few short months your in the same place but no savings

    Exactly, the OP really needs to be posting on the Debt Free Wannabe board to find out how to avoid getting into the same situation again.
  • qwert_yuiopqwert_yuiop Forumite
    3.5K Posts
    Ninth Anniversary 1,000 Posts
    ✭✭✭✭
    DCFC79 wrote: »
    Stop lending money.
    Only buy what you need/what you can afford.

    Get a handle on it now before it balloons out of control.

    Yes use your savings to clear the overdraft.

    Stop borrowing money.
    “What means that trump?” Timon of Athens by William Shakespeare
  • SystemSystem Forumite
    177.9K Posts
    10,000 Posts Name Dropper
    ✭✭✭✭✭✭
    They are giving you zero (or around that) for your money.
    You are giving them 15.9% for theirs.

    Either clear it off or at least to -£250
  • bma14bma14 Forumite
    87 Posts
    Yes definitely clear the overdraft with your savings - you are paying more in interest on the overdraft than you are receiving from the 'savings'. Pay it off, use the interest free portion to get you to payday and then work on clearing that interest free portion. Come over to the debt-free-wannabe board and you will get lots of tips about how to do it. It's not easy but it's necessary before you end up on a downward spiral of unmanageable debt.

    I also for ages had a large overdraft with large savings, but it's just not worth it.
    Total Debt January 2017: £2,000 Total Debt October 2019: £300 (85% repaid)
    Savings Goals: House Deposit: £15,000/£15,000; Christmas 2019 Savings: £450/£600


    Soon to be on my journey of renovating a house on a budget :)
This discussion has been closed.
Latest MSE News and Guides

Energy price cap could be extended beyond 2023

New plans have just been announced by the Government

MSE News

Cheap contents insurance for tenants

DON'T assume your landlord covers you

MSE Guides

Summer sizzlers round-up

Incl £2ish sun cream & £1.50 disposable BBQs

MSE Deals