Overdraft help please

[Deleted User]

Hi,

Quick question regarding clearing the OD. We are going to do a money transfer to get rid of it

My thinking is that once the money is in the account and the OD is reduced, we should theoretically get DH's 'wage' back as the OD won't be there???

The OD is £2000, I don't need to transfer £4000 to balance things out?

Hope that makes sense?

Thanks

Pmo2
x

EssexHebridean

if your account is currently £2k in debit and you transfer £2k in, then that will take you to a zero balance. Your OH's pay going in will then give a credit balance. Hopefully I'm reading your question right there!

Willing2Learn

But if the OD is always at -£2K balance before salary income is credited, then it would need a 4K transfer so that the OD facility can be closed...

[Deleted User]

Willing2Learn wrote: »

But if the OD is always at -£2K balance before salary income is credited, then it would need a 4K transfer so that the OD facility can be closed...

Yes that is about correct.

[Deleted User]

EssexHebridean wrote: »

if your account is currently £2k in debit and you transfer £2k in, then that will take you to a zero balance. Your OH's pay going in will then give a credit balance. Hopefully I'm reading your question right there!

Yes, DH got paid yesterday, the small balance is showing plus the OD availability

[Deleted User]

Willing2Learn wrote: »

But if the OD is always at -£2K balance before salary income is credited, then it would need a 4K transfer so that the OD facility can be closed...

I've just sent yuou a PM, hope that's ok?

Willing2Learn

Yup, no problem with the PM. But I will answer on here just in case it proves useful to others.

If you always 'dip into' the overdraft for £1,500 before wages hit your account, then you would need to deposit double that amount (£3,000), so that your SOA budget expenses don't result in you having to use the OD again (or any other borrowing).

I am not sure whether the above reads correctly. Let me know if it does not make any sense and I'll try again...

[Deleted User]

Willing2Learn wrote: »

Yup, no problem with the PM. But I will answer on here just in case it proves useful to others.

If you always 'dip into' the overdraft for £1,500 before wages hit your account, then you would need to deposit double that amount (£3,000), so that your SOA budget expenses don't result in you having to use the OD again (or any other borrowing).

I am not sure whether the above reads correctly. Let me know if it does not make any sense and I'll try again...

Hi,

Thanks that makes sense, based on what I told you in my PM.

Not sure if it the right way to go now then, may be worth just reducing it by just over half e.g I do £3K instead of £4K and gradually reducing the rest?

Willing2Learn

Then basically I think the best way forward, (if I understand you correctly) would be to amend your SOA, to reflect the fact that you would be snowballing the OD debt down gradually. That way everything is budgeted for...

enthusiasticsaver

Deleted_User wrote: »

Hi,

Quick question regarding clearing the OD. We are going to do a money transfer to get rid of it

My thinking is that once the money is in the account and the OD is reduced, we should theoretically get DH's 'wage' back as the OD won't be there???

The OD is £2000, I don't need to transfer £4000 to balance things out?

Hope that makes sense?

Thanks

Pmo2
x

You don't need a money transfer of £4K to clear a £2k overdraft. A £2k money transfer will clear the overdraft then you use your wages to live off.

enthusiasticsaver

Willing2Learn wrote: »

But if the OD is always at -£2K balance before salary income is credited, then it would need a 4K transfer so that the OD facility can be closed...

:question: I am not sure of your logic (or maths) here or am I missing something. If the OP has an overdraft limit of £2k and goes up to that just before their salaries hit the account then a £2k money transfer will clear the overdraft then their wages will take the account into credit so they live off that during the following month. Once the money transfer clears the overdraft and the wages are paid in the overdraft facility can be cancelled.