Can my bank transfer savings to overdraft?

deanofscotland

Hi. I am a student, I have an overdraft of around 1,000 pounds which I am paying off.

I have recently inherited some money and want to pay it into a savings account I have in the same bank. I don't want to pay off my overdraft immediately. But I want to know can my bank move the money from savings to my current account without my permission?

YorkshireBoy

Yes they can. Check your current account T&Cs, specifically the bit about "right to set-off".

deadendwaterfall

You'd be best off opening an account with an unrelated bank and putting your inheritance into that, unless banks talk to each other in this respect?

pramsay13

Is your overdraft interest-free? Otherwise it might be better paying off the overdraft as you will be paying more in interest than you will get in savings.

colsten

How much does the overdraft cost you?

How much are you expecting to get paid in interest on your savings?

agrinnall

deadendwaterfall wrote: »

You'd be best off opening an account with an unrelated bank and putting your inheritance into that, unless banks talk to each other in this respect?

The overdraft will be reported to the CRAs but there won't be any set off between banks with different banking licences (so for instance, RBS and NatWest would be fine, but HSBC and FD might be risky).

jd87

If you're following the terms and conditions of your arranged overdraft, why would the bank want to interfere in that? They are making money out of you in overdraft fees. Is it an unarranged overdraft?

Herbalus

They can do, but they won't if you're within the terms of your overdraft and operating it correctly.

If you're still a student and have an interest-free overdraft, and you're operating within that agreed limit, then there's no reason for the bank or you to use the money to reduce the overdraft.

When I was a student I moved money from my overdraft to my savings account with the same bank. It was a 0% overdraft and a 3% savings account, so I often moved as much money as I could into the savings account. But stay within the conditions of the account and the bank won't just use set-off if you're paying down the overdraft in line with the account conditions.

JuicyJesus

They can, but they're very unlikely to unless you actually default on the overdraft in some way or you leave the account overdrawn for months with no money going into the account.

Flobberchops

As JD87 said. Are you concerned they are likely to suddenly call in the overdraft? If not, don't worry.

jimjames

Flobberchops wrote: »

As JD87 said. Are you concerned they are likely to suddenly call in the overdraft? If not, don't worry.

But this makes sense

pramsay13 wrote: »

Is your overdraft interest-free? Otherwise it might be better paying off the overdraft as you will be paying more in interest than you will get in savings.

Why pay overdraft fees when interest rates on the savings are so small in comparison?