Overdrafts

Nasqueron

MEM62 said:

Altior 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.

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.

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. 

You don't need to check every day.  You just need to ensure that sufficient funds are in the account to cover all the DD's and STO's for that month.  (Plus a little of you want a safety net)      

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

As above, just leave sufficient funds to cover the months bills.   If you do it on a month to month basis then it doesn't matter whether your DD comes out on the 15th or the 20th - the money is there.  There is no point in running your finances so close to the wind that a DD taken early is an issue.    

Thanks but as I said, I don't get penalised on the rare occasions it goes over due, again, to a firm taking money before they are supposed to. I would rather have the interest, even if it's a few pence, over it sat in an account doing nothing. If my DD should go out on the 19th and I put the money in on the 18th, the firm should not take it on the 15th

Eco_Miser

MEM62 said:

Altior 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.

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.

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. 

You don't need to check every day.  You just need to ensure that sufficient funds are in the account to cover all the DD's and STO's for that month.  (Plus a little of you want a safety net)      

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

As above, just leave sufficient funds to cover the months bills.   If you do it on a month to month basis then it doesn't matter whether your DD comes out on the 15th or the 20th - the money is there.  There is no point in running your finances so close to the wind that a DD taken early is an issue.    

No, but it does matter if a DD expected on the 1st comes out on the previous 28th.

However, if a DD is taken earlier than notified, a claim can be made under the Direct Debit Guarantee.

jon81uk

I try to maintain as low a balance in my current account as possibly. First Direct give a £250 interest free overdraft anyway, so if something does go wrong and I've forgotten to move money there is something.