Best / cheapest bank account for using overdraft?

Not_Me_Officer

Not talking £1000s but maybe just a £500 overdraft.Which bank account would be the best (cheapest) for this or is there not really a huge difference between them?

YorkshireBoy

Nationwide FlexDirect offers a 12 month 0% overdraft facility...by which time you'll have all your finances in order, meaning you won't need it!


In general though, for low overdraft balances you're better off with one that charges debit interest (typically 18.9% EAR) rather than one which charges a daily fee. However, the trend these days seems to be to go towards fee-based facilities, so best to eliminate the need for it rather than trying to find the cheapest.

Not_Me_Officer

I've gone through this with the person i'm asking for but not everyone handles their finances the same way as we might

Thanks for the response.

eskbanker

Is an alternative form of debt likely to be an option, such as a credit card, preferably a long term 0% one?

Jonmenzies

Not_Me_Officer wrote: »

Not talking £1000s but maybe just a £500 overdraft.Which bank account would be the best (cheapest) for this or is there not really a huge difference between them?

Hi. I am with Citibank and I went with them because you got a £500 overdraft for free. But over the last few years they have started to make you jump through hoops. Like now I need to deposit £3500 per month to save paying £15 per month charge. So I would just fast pay money out and back in each month.

But actually, I can't be bothered doing that anymore. I have asked M&S bank to make theirs my main account (manual switch) but even though the overdraft is only interest free on the first £100 that suits me fine.

First Direct, I think give you £250 interest free out of a £500 overdraft. I have been with them and don't like them but that's another story.

Don't go near Santander, Halifax or Bank of Scotland as they charge £1 per day that you are overdrawn. This need to be banned. Lloyds and TSB seem to have a similar daily charge but Lloyds has changed this recently I think - for the better.

RBS and Natwest, not sure about them but they are not somewhere I would consider banking with.

Nationwide just charge about 19% I think on the drawn balance.

Hope that is helpful but there are some real experts that will help you further on this subject. It's such a helpful place.

Not_Me_Officer

eskbanker wrote: »

Is an alternative form of debt likely to be an option, such as a credit card, preferably a long term 0% one?

Not in this case. Credit card in hand would result in "oooh what can i buy now ........"

Jonmenzies wrote: »

Hi. I am with Citibank and I went with them because you got a £500 overdraft for free. But over the last few years they have started to make you jump through hoops. Like now I need to deposit £3500 per month to save paying £15 per month charge. So I would just fast pay money out and back in each month.

But actually, I can't be bothered doing that anymore. I have asked M&S bank to make theirs my main account (manual switch) but even though the overdraft is only interest free on the first £100 that suits me fine.

First Direct, I think give you £250 interest free out of a £500 overdraft. I have been with them and don't like them but that's another story.

Don't go near Santander, Halifax or Bank of Scotland as they charge £1 per day that you are overdrawn. This need to be banned. Lloyds and TSB seem to have a similar daily charge but Lloyds has changed this recently I think - for the better.

RBS and Natwest, not sure about them but they are not somewhere I would consider banking with.

Nationwide just charge about 19% I think on the drawn balance.

Hope that is helpful but there are some real experts that will help you further on this subject. It's such a helpful place.

This person is actually with Santander on their Everyday Current Account.

When joining them they wanted to be with a bank that (due to work hours) was open on a Saturday afternoon which around here at least left only Halifax or Santander.

Although since the opening they have actually got a better deal as far as weekend work goes - in that they very rarely have to do it so if they needed to get to the bank then they could do in a morning now.

YorkshireBoy

How many days per month are they in the overdraft? In other words, what's the typical cost per month at £1/day?

Don80

Jonmenzies wrote: »

Don't go near Santander, Halifax or Bank of Scotland as they charge £1 per day that you are overdrawn. This need to be banned. Lloyds and TSB seem to have a similar daily charge but Lloyds has changed this recently I think - for the better.

Lloyds, Bank of Scotland and Halifax are overhauling their overdraft charges and interest from November. An MSE article said:

From November, the following will apply across Halifax, Lloyds and Bank of Scotland:

• Arranged overdraft fees will be a flat rate of 1p per £7 borrowed.
• There won't be any unarranged overdraft fees and charges.
• There'll be no fees for missed payments.
• Fee-free buffers on many accounts (eg, £25 on Lloyds/Bank of Scotland Classic and £50 on Halifax Reward) will be reduced to £6.99.
• Overdraft fees will be charged at the end of each day rather than once a month.
• All customers who've given their mobile number will be sent text alerts when their balances are low.

http://www.moneysavingexpert.com/news/banking/2017/07/lloyds-banking-group-overhauls-overdraft-fees