Overdraft, when not really needed

dealyboy

ForumUser7 said:

Hi,

I’m eligible to get an interest free overdraft on my TSB Student Account.

I don’t anticipate I’ll need it, and if I did it’d only ever be for a couple of days while waiting for money from Coventry BS to come across.

Presumably it’s a good idea to go for it even if I won’t really use it?

On one hand, I’m thinking other lenders may be worried about the total amount of credit, but on the other hand they might think it’s good as I’m trusted and can manage it responsibly.

Thank you

I hope you don't mind if I give my thoughts @ForumUser7 (OP) but I think many excellent points have already been made.

I'm at the other end of life's experience as an OAP, but do have several accounts both current accounts and savings accounts, overdrafts and credit cards; I also have a low annual income of £12,500 which I always declare, plus housing costs. I haven't checked any credit reports for decades, but I have opened about twenty current accounts in the last eighteen months, switched about eight, and have about fifteen regular savers and easy access savers, there have been occasions where I have done three or four openings of all types of accounts concurrently. I have not been declined once and I am invited to apply for new credit cards all the time, a couple of months ago I was offered to apply to increase my Tesco CC limit and it was increased from £3,800 to £6,800.

Clearly I am considered a good risk, but it can't be my income, so what is it ...

Well I am a home owner, but it's only a cheap park home, I don't have a mortgage but do have 'pitch fees' (ground rent). I don't seek credit, indeed I generally turn down arranged overdrafts and interest free credit cards, but I do use credit and debit cards all the time, but I pay off the outstanding credit card balances each month. I haven't done stoozing but simply because it seems too much like hard work and I don't spend that much anyway. I think as has been pointed out a record of using credit, but not excessively, and then repaying it is what potential lenders want to see, be it mortgage, loan or overdraft, not defaulting is very important. My low income was not a bar to my being given a Barclaycard Rewards CC with a credit limit of £8,000.

I do understand that a history is very important and it's not easy for somebody starting out, jobwise, with accommodation, or finance/banking. Perhaps if a six month history can be acquired maybe on a relatively low key basis and you can show both prudence and responsibility then your risk profile may be enhanced. A Student account arranged overdraft facility, in my view, is a very good way to start.

By the way I think it was about this time last year you were celebrating your 18th birthday so I'm guessing I'm not too far out wishing you a happy 19th 

ForumUser7

dealyboy said:

ForumUser7 said:

Hi,

I’m eligible to get an interest free overdraft on my TSB Student Account.

I don’t anticipate I’ll need it, and if I did it’d only ever be for a couple of days while waiting for money from Coventry BS to come across.

Presumably it’s a good idea to go for it even if I won’t really use it?

On one hand, I’m thinking other lenders may be worried about the total amount of credit, but on the other hand they might think it’s good as I’m trusted and can manage it responsibly.

Thank you

I hope you don't mind if I give my thoughts @ForumUser7 (OP) but I think many excellent points have already been made.

I'm at the other end of life's experience as an OAP, but do have several accounts both current accounts and savings accounts, overdrafts and credit cards; I also have a low annual income of £12,500 which I always declare, plus housing costs. I haven't checked any credit reports for decades, but I have opened about twenty current accounts in the last eighteen months, switched about eight, and have about fifteen regular savers and easy access savers, there have been occasions where I have done three or four openings of all types of accounts concurrently. I have not been declined once and I am invited to apply for new credit cards all the time, a couple of months ago I was offered to apply to increase my Tesco CC limit and it was increased from £3,800 to £6,800.

Clearly I am considered a good risk, but it can't be my income, so what is it ...

Well I am a home owner, but it's only a cheap park home, I don't have a mortgage but do have 'pitch fees' (ground rent). I don't seek credit, indeed I generally turn down arranged overdrafts and interest free credit cards, but I do use credit and debit cards all the time, but I pay off the outstanding credit card balances each month. I haven't done stoozing but simply because it seems too much like hard work and I don't spend that much anyway. I think as has been pointed out a record of using credit, but not excessively, and then repaying it is what potential lenders want to see, be it mortgage, loan or overdraft, not defaulting is very important. My low income was not a bar to my being given a Barclaycard Rewards CC with a credit limit of £8,000.

I do understand that a history is very important and it's not easy for somebody starting out, jobwise, with accommodation, or finance/banking. Perhaps if a six month history can be acquired maybe on a relatively low key basis and you can show both prudence and responsibility then your risk profile may be enhanced. A Student account arranged overdraft facility, in my view, is a very good way to start.

By the way I think it was about this time last year you were celebrating your 18th birthday so I'm guessing I'm not too far out wishing you a happy 19th 

Thanks @dealyboy - that’s very kind of you

I think I’ll apply, sounds good to have as a safety net.

Money_and_Travel

I have a £500 overdraft available on my Lloyds account.

I seldom use it, and when I do it's maybe £20 for a  few days, but it's there if an emergency arises, such as my freezer breaking down.

boingy

Just a word of caution about stoozing. It can make you a few quid but you have to be organised and stay on top of it. One slip and you'll pay a fee that cancels out any profits you have made.