Account Overdrafts

traceeb

Hi, i hope someone can give me some advice. I have an overdraft facility with my bank and regularly go over the agreed £400. For quite some time (a few years) the bank will not allow me to officially increase my overdraft to £500, but they will always allow me to unofficially use my overdraft up to £500, so then i face charges.

eskbanker

Best advice is obviously not to go beyond your £400 agreed limit, and then you won't incur charges for going into unarranged overdraft.

However, the rules are changing by next April, which means that banks won't be able to impose differential charges for unarranged overdrafts. This is unlikely to be to your advantage though, as one of the few to declare their intentions so far (Nationwide) are doubling their interest rate.

Having said that, Nationwide will be imposing more rigid controls to decline transactions that would take account-holders into unarranged overdrafts in the first place, which is perhaps what you're hoping for from your bank?

sal_III

The best advice I could give is to get your finances in order and rid yourself of the bad habit of using overdraft as a borrowing option.

There is plenty of advice and information on budgeting here on the MSE forums.

pinkdalek

All that would happen if the bank gave you an approved overdraft of £500 is you'll end up going over your £500 limit up to £600 and being charged.
The answer lies with you my friend and your spending/budget patterns. You're the only one gonna get out of this.

colsten

Your best course of action is to get rid of the overdraft alltogether, especially since banks can withdraw overdrafts at short notice.

You could start by filling in an SOA and posting it on the Debt Free Wannabe board for comments.

Terry_Towelling

If you are regularly in your overdraft and the amount of indebtedness is 'broadly' the same on a monthly basis (and not steadily growing), it might suggest that you are just about living within your income but that some event(s) in the past caused you to overspend by the amount of said indebtedness.

Can you identify what the event was that caused this? Can you also work out how much you are paying for the overdraft annually?

Whatever the cause, you perhaps should try to completely cut all discretionary spending for a couple of months and see if that brings you back into line - or at least nearer to being in line. If it creates an improved position, simply repeat.

NB all of the above is based on the assumption that you have a regular and consistent monthly income.