What does NatWest prefer? Overdraft usage behavior...

Harbour_Hopeful

I have an arranged overdraft with NatWest for £1000. What sort of usage do you think they prefer?

I would like your answer to be based on the banks perspective - not whether using an overdraft is a bad idea etc.

Which one:

1. Only use it in urgent circumstances and only dip into a small amount of the total limit, putting your overall balance back above negative ASAP.

2. Use your overdraft deeply into the set limit and keep your account in an overdraft state, but not exceeding the arranged maximum. Keep incoming payments flowing through the account throughout the month to demonstrate financial income.

I have a feeling that it is 2, however I could be wrong.

eskbanker

Banks won't have a preference as such - they've granted you a facility and it's up to you if/how you use it. Yes, the more you use it then the more it costs you in interest (and other charges?), so that's more revenue for them, but conversely the fact that you owe them money increases their risk (that you'd default).

Lack of use might ultimately lead to limit reduction or even facility withdrawal, but OTOH if you used it heavily and they chose to demand repayment then that could put you in an awkward situation.

So, I'd just use the overdraft as/when it works for you (and few would choose to use one if they had the choice), don't try to second guess what's good for them....

18cc

Banks make profit on lending out money....

PeacefulWaters

18cc wrote: »

Banks make profit on lending out money....

They make the profit on the interest margin between deposits and loans, minus write offs.