Overdrafts

Altior

friolento said:

Altior said:

thevoid69 said:

Hi,
I have my own 'overdraft' where I keep £1000 in my current account at all times and forget about it, in case of an unexpected bill and for peace of mind.
However, I've been thinking that could be earning interest with my savings so it could be worth getting an overdraft for £1000 on my current account, not that I would ever use it.

I know applying for an overdraft would involve a soft search, but I presume if I proceed, it would be a hard search and effect my credit rating?

My credit rating is very high at the moment so I don't want to damage it, but unsure of the best way to go about what I'm needing. 

Thanks

An overdraft usually carries fees, so probably not a lot would change, you'd still maintain a buffer to prevent going into overdraft.

 

I have a large-ish overdraft, £5K, on one of my current accounts. It often gets used for a few hours on the first of every month, for numerous SOs. It always gets settled on the day, before any charges incur, so I never pay any fees.

If I wasn’t in a position to pay my bills without borrowing, it would only use overdrafts as a last resort since they are one of the most expensive of credit facilities. Loans or credit cards (especially of the 0% variety) would be my preference for budgeting accordingly.

Yep, the sense with the OP is that they want the safety net of an overdraft, rather than actually using it (for whatever reason). Most regular people don't want to be checking their balances every single day, or know exactly when amounts will be taken out, and how much. Of course, this forum (especially regulars) is tilted towards people who are more over their finances than typical, and many wouldn't mind utilising an OD if it didn't cost them. So I doubt the OP's new target minimum balance would be £0, rather something between £0 and £1000, ie not much tangible difference in reality. 

I am one of those people who does [almost] check balances daily, and knows exactly what's going out and when. I have an overdraft facility. But I still like to have a buffer in my main current account. I don't use the OD facility, but it's insurance against an oversight. 

Nasqueron

MEM62 said:

thevoid69 said:

I would prefer a buffer in my account though in case something comes out unexpectedly. 

That is not going to happen with any well managed account.  

Hah! Mine is managed to the nth degree, down to maximising every penny of interest but it still happens, Tesco and Santander CCs have both taken payments early (e.g. last Tesco one was due 20th like every month, was taken on the 15th), I'm fortunate NatWest have a flexible overdraft if you put funds in before 3pm

friolento

Nasqueron said:

MEM62 said:

thevoid69 said:

I would prefer a buffer in my account though in case something comes out unexpectedly. 

That is not going to happen with any well managed account.  

Hah! Mine is managed to the nth degree, down to maximising every penny of interest but it still happens, Tesco and Santander CCs have both taken payments early (e.g. last Tesco one was due 20th like every month, was taken on the 15th), I'm fortunate NatWest have a flexible overdraft if you put funds in before 3pm

I have until 20:15 at Santander, and they send me a text before 9 am if I end up overdrawn on the day.

I believe First Direct give you until 23:59 to clear any overdrafts for the day. Plus they give you a small amount of interest-free overdraft. I am not tempted by FD's current account (other than when I am forced to use it for their RS) but it might be the ticket for others.

born_again

Nasqueron said:

MEM62 said:

thevoid69 said:

I would prefer a buffer in my account though in case something comes out unexpectedly. 

That is not going to happen with any well managed account.  

Hah! Mine is managed to the nth degree, down to maximising every penny of interest but it still happens, Tesco and Santander CCs have both taken payments early (e.g. last Tesco one was due 20th like every month, was taken on the 15th), I'm fortunate NatWest have a flexible overdraft if you put funds in before 3pm

If it's a DD that takes you into a unauthorised O/D. You will get a message telling you to add funds before (usually around 12:00) as banks run DD's twice & give people a chance to fund account before official rejection of DD. Which can lead to a charge by originator. 

Theleak250

Having a good credit score does not mean you can get an overdraft. Some banks such as Barclays will not give you one for some time after account opening. HSBC is also a bit tight although I eventually got £1000 out of them. 

I use my OD as part of my savings system. The goal is to stay out of OD. Once I enter it spending slows down. 

jimjames

friolento said:

Altior said:

thevoid69 said:

Hi,
I have my own 'overdraft' where I keep £1000 in my current account at all times and forget about it, in case of an unexpected bill and for peace of mind.
However, I've been thinking that could be earning interest with my savings so it could be worth getting an overdraft for £1000 on my current account, not that I would ever use it.

I know applying for an overdraft would involve a soft search, but I presume if I proceed, it would be a hard search and effect my credit rating?

My credit rating is very high at the moment so I don't want to damage it, but unsure of the best way to go about what I'm needing. 

Thanks

An overdraft usually carries fees, so probably not a lot would change, you'd still maintain a buffer to prevent going into overdraft.

 

I have a large-ish overdraft, £5K, on one of my current accounts. It often gets used for a few hours on the first of every month, for numerous SOs. It always gets settled on the day, before any charges incur, so I never pay any fees.

But as per my post you don't need an overdraft to do that, the bank give you a grace period to pay the money in so you don't get charged unauthorised overdraft fees but the DD is still paid. 

Nasqueron

born_again said:

Nasqueron said:

MEM62 said:

thevoid69 said:

I would prefer a buffer in my account though in case something comes out unexpectedly. 

That is not going to happen with any well managed account.  

Hah! Mine is managed to the nth degree, down to maximising every penny of interest but it still happens, Tesco and Santander CCs have both taken payments early (e.g. last Tesco one was due 20th like every month, was taken on the 15th), I'm fortunate NatWest have a flexible overdraft if you put funds in before 3pm

If it's a DD that takes you into a unauthorised O/D. You will get a message telling you to add funds before (usually around 12:00) as banks run DD's twice & give people a chance to fund account before official rejection of DD. Which can lead to a charge by originator. 

As I said, NatWest give you until 3pm until they run it again

Nasqueron

Theleak250 said:

Having a good credit score does not mean you can get an overdraft. Some banks such as Barclays will not give you one for some time after account opening. HSBC is also a bit tight although I eventually got £1000 out of them. 

I use my OD as part of my savings system. The goal is to stay out of OD. Once I enter it spending slows down. 

Credit scores are a marketing gimmick, nobody sees them except you, they pay no part in any credit decision

friolento

jimjames said:

friolento said:

Altior said:

thevoid69 said:

Hi,
I have my own 'overdraft' where I keep £1000 in my current account at all times and forget about it, in case of an unexpected bill and for peace of mind.
However, I've been thinking that could be earning interest with my savings so it could be worth getting an overdraft for £1000 on my current account, not that I would ever use it.

I know applying for an overdraft would involve a soft search, but I presume if I proceed, it would be a hard search and effect my credit rating?

My credit rating is very high at the moment so I don't want to damage it, but unsure of the best way to go about what I'm needing. 

Thanks

An overdraft usually carries fees, so probably not a lot would change, you'd still maintain a buffer to prevent going into overdraft.

 

I have a large-ish overdraft, £5K, on one of my current accounts. It often gets used for a few hours on the first of every month, for numerous SOs. It always gets settled on the day, before any charges incur, so I never pay any fees.

But as per my post you don't need an overdraft to do that, the bank give you a grace period to pay the money in so you don't get charged unauthorised overdraft fees but the DD is still paid. 

Any standard grace period expires around 1 or 2pm on the day. My overdraft grace period expires 20:15 and I know that at least one bank gives you until 23:59 for it. Mind you,  not everyone can get an agreed overdraft, or one large enough for their needs. FD turned down my request for £300 (only £50 more than their free O/D available to all customers). Santander give me £5k. As far as I can tell, this credit arrangement has no negative impact on my credit worthiness because Zopa, COOP, Barclays and Lloyds keep spamming me with loan offers, and AMEX have upped my credit card limit, which in total runs to several tens of thousands across a handful of credit cards. I never have any overdue payment markers on my credit file, and I never pay any interest.