Overdraft or Savings?

Joejoe77

Hello all,
I have a peculiar problem I hope you can help with.
I have constantly been in my overdraft of some £5,000. Recently my family gave me £5,000 to use in emergencies. Now, if it sits in my current account I’m worrying that my bank will cancel my overdraft and therefore I’ll lose that £5,000 of emergecny money (which my family may want back at some point).

The other option is I put it in a savings account, thereby keeping it safe, but then continuing to incur overdraft charges (some £90 a month) from my current account. Any ideas/suggestions/counsel?

Many thanks in advance for any help!

eschaton

Joejoe77 wrote: »

Hello all,
I have a peculiar problem I hope you can help with.
I have constantly been in my overdraft of some £5,000. Recently my family gave me £5,000 to use in emergencies. Now, if it sits in my current account I’m worrying that my bank will cancel my overdraft and therefore I’ll lose that £5,000 of emergecny money (which my family may want back at some point).

The other option is I put it in a savings account, thereby keeping it safe, but then continuing to incur overdraft charges (some £90 a month) from my current account. Any ideas/suggestions/counsel?

Many thanks in advance for any help!

With £90 per month in charges then the answer is pretty obvious.

Use this as a starting point to sort out your finances and stop living in a very big overdraft.

Superscrooge

Paying £90 a month (£1,080 a year) for an overdraft that you could pay off is daft!

surreysaver

Unless by paying off the overdraft, it will encourage you to spend money you don't have and build up an overdraft again

ValiantSon

Pay the overdraft off. The charges are huge.

Have your family given you this money, or have they leant you it? If they have given it then they can't really ask for it back!

Red-Squirrel_2

Tell the family member that you are £5000 overdrawn and that their gift will be a huge help as it will enable you to pay back the overdraft and stop wasting £90 every single month.

Your current financial situation already IS an emergency, and you are very lucky that you can sort it.

enthusiasticsaver

Paying £90 per month for an overdraft is crazy. Use the gift from your family to pay it off and cancel the limit. Start to save so much per month so that you can pay your family back if they need it.

binaryuniverse

It's not a peculiar problem at all. More a case you want to have your cake and eat it.

Pay off the overdraft. Use that £90 a month you get back to start building up a new emergency fund. Or, if a real emergency does come along, take out a 0% credit card.

eschaton

binaryuniverse wrote: »

It's not a peculiar problem at all. More a case you want to have your cake and eat it.

Pay off the overdraft. Use that £90 a month you get back to start building up a new emergency fund. Or, if a real emergency does come along, take out a 0% credit card.

For someone living in a £5k overdraft then a credit card is the last thing that they need.

PeacefulWaters

The trick now is to stop spending more than you earn to ensure you don't just build up a replacement debt.

Clear the overdraft.

Start saving at least the £90 a month that you were being charged.

Don't build up any hew debts.

binaryuniverse

eschaton wrote: »

For someone living in a £5k overdraft then a credit card is the last thing that they need.

Umm. If they pay it off then they won't be. Like I said, it's the option should an emergency come along.