£17k overdraft facility at 1.75%....

harrys66

Hi,

Have this *very* old bank account with a £17k overdraft facility with interest charged at 1% above base.....

Any thoughts on risks of investing this (passively, any term) with minimal risk?

Harry

eskbanker

Overdrafts are repayable on demand, so there is a risk that the bank, on seeing you use it all without repaying anything other than interest, will insist that you settle it at a time of their choosing rather than yours.

Any investment has the potential to lose value (at points during its lifecycle) so if your £17K had become, say, £12K when the bank calls the overdraft in, what would you do?

Although you say you'd be looking at minimal risk investments, if you're eroding already low returns by deducting 1.75% then it makes it unlikely to be worth doing from a return on investment perspective, as well as all the other risks....

harrys66

oh ok, its an ongoing facility, been going for 15 years, only end when i die

was hoping along the lines of an long term bond pegged to uk base rate

oh well, thanks

IanSt

Possibly take a look at the family building society and their 5 year tracker rate bond which tracks the Bank of England Bank Rate, plus 1.42% (annual interest) or 1.40% (monthly interest) for the duration of the term, other terms are available.

However don't forget that depending on your particular circumstances that you may have to pay tax on the interest received (either now or in the future) , and that you have to stay in the bond for the full term so you need to be absolutely sure that you could pay off the overdraft if needed and that you won't need access to any of the money in the bond.

fun4everyone

You could always fill regular savers at 2%-5% with it.