Paying back an overdraft

PandaPants_2

I phoned my bank to ask about paying back ym student overdraft of £650. I thought it was just a matter of reducing the amount i can withdraw each month, but apparently not. She wasn't very clear on exactly how i pay it back and i cant get through to my account manager. He has been in meetings/busy since Thursday. :eek:

Can anyone help?? I want to pay it off about £100 per month.

Meanymoo

If you've kept your account in good order, your bank is unlikely to reduce your overdraft limit unless you ask them to. What they will do, of course, is start to charge you interest on the overdraft at a certain point after you graduate. I'm assuming that you've recently graduated? What you need to know is the date at which this ceases to be interest-free.

You say you want to reduce the overdraft by £100 a month. That sounds like a good plan, and I'm assuming that you have £100 spare each month after all your necessary expenditure? All you have to do is to take £100 less per month out of that bank account and your account will be in the black after 7 months. Once you're back in the black, I'd suggest keeping the overdraft in place as a safety net. For emergencies, an overdraft is a much cheaper way of borrowing than a credit card.

If the bank keeps your overdraft interest-free for some time (I think I was allowed a couple of years after graduation, but that was some time ago), then put your £100 per month into an ISA instead. You'll earn interest on it, and the money will be there for you to transfer to your bank account once the overdraft ceases to be interest-free.

BenL

If you have recently graduated, here is a link to Martins article on the best graduate accounts

http://www.moneysavingexpert.com/banking/graduate-bank-accounts

The articles are accessed from the top menu bar, this one was under Banking/Saving.

Account Manager - sounds expensive to me!

PandaPants_2

Meanymoo wrote: »

If you've kept your account in good order, your bank is unlikely to reduce your overdraft limit unless you ask them to. What they will do, of course, is start to charge you interest on the overdraft at a certain point after you graduate. I'm assuming that you've recently graduated? What you need to know is the date at which this ceases to be interest-free.

You say you want to reduce the overdraft by £100 a month. That sounds like a good plan, and I'm assuming that you have £100 spare each month after all your necessary expenditure? All you have to do is to take £100 less per month out of that bank account and your account will be in the black after 7 months. Once you're back in the black, I'd suggest keeping the overdraft in place as a safety net. For emergencies, an overdraft is a much cheaper way of borrowing than a credit card.

If the bank keeps your overdraft interest-free for some time (I think I was allowed a couple of years after graduation, but that was some time ago), then put your £100 per month into an ISA instead. You'll earn interest on it, and the money will be there for you to transfer to your bank account once the overdraft ceases to be interest-free.

That is VERY good advice, unf im far too immature to consider having access to money without spending it! :rotfl: I got to speak to my account manager today and he said i just need to ring them every month/week/whatever and ask for my overdraft to be reduced by x amount. Which is great because i get paid weekly at the moment and im earning half decent money so i can get it paid off quicker than i thought!!

fluffymummy

You'll just have to spend the £100 less each month, and when your account is in the black, ask the bank to reduce your overdarft. Its doubtful they will do it automatically for you. You can reduce overdrafts on internet banking if you have it.