overdrafts - how do you eat yours?

pavlovs_dog

ok then guys, another issue for the debate (nice to see things hotting up in here again).

how do you use your student overdaft?

i have currently not touched mine AT all, and even now, at my lowest point financially, im still £500+ in credit.

my inital thinking, as with my credit card, was to leave both for emergencies. i have since used my CC (when maestro isnt accepted), but treat it as a debit card and clear the balance in full each month.

i initally aimed to not use my OD

a) because i am completely self financing, and theres no one to run to if i run out of money. its my 'emergency fund'

b) if my and the OH go for a mortgage in a few years time, thought it would look better to the banks to see that i have managed without it, and stayed in the black.


however, i had a letter from HSBC the other day telling me they had increased my OD to £1250 interest free. i have started to think about whacking about £800 of it in my ING account where i can stooze as much interest as possible off of it, yet still have access to it if i should need it fairly quickly. (hence building up depsoit for new place/furniture fund etc?). then, when i graduate, i could pay it back in a lump sum before the interest free period ends

one to mull over i guess...



so what do you do with your OD?

Al_Mac

pavlovs_dog wrote:

i had a letter from HSBC the other day telling me they had increased my OD to £1250 interest free.

What are you doing here, put it in the ING now!!!! Interest free means free. You appear fairly savvy, grab the lot, now!:mad:

Have you done it yet?

Unless there is a monthly charge of course:o

pavlovs_dog

Al_Mac wrote:

What are you doing here, put it in the ING now!!!! Interest free means free. You appear fairly savvy, grab the lot, now!:mad:

Have you done it yet?

the reason i have hung fire, as i wrote ...

pavlovs_dog wrote:

i initally aimed to not use my OD

a) because i am completely self financing, and theres no one to run to if i run out of money. its my 'emergency fund'

is because it is my security blanket.

im scared of being left in the cold

fragster

currently got nearly 4.5 grand in my minicash ISA, the best part of 4k is 3x interest free overdrafts. its accessible instantly as well, can transfer it online straight from ISA to current account, however there is a limit of 3k a year paid into the isa, so if i pay in 1k and take out 1k later on my limit for the year goes down to 2k even though i havent got any more in it.

Rich_4

Yeah, just whack it in your ISA since you can always withdraw it if necessary... If not, then bonus!

I don't know what I did with mine, but about half of it went on a couple of trips to Selfridges ^^;

stuwilky

pavlovs_dog wrote:

the reason i have hung fire, as i wrote ...


is because it is my security blanket.

im scared of being left in the cold

Very commendable and disclplined of you, but still stick it all in the ISA - you still have your emergency fund (and instant access to it) but you are earning ~5% interest on the same amount.

maninwhitecoat

Thats what i was thinking of doing with mine. Do banks mind if i'm in the black all the time, but pay it off when i've finished uni?

stuwilky

maninwhitecoat wrote:

Thats what i was thinking of doing with mine. Do banks mind if i'm in the black all the time, but pay it off when i've finished uni?

I think you mean red!

Im with rbos and occasionally get a letter telling me im "not using my account as it was intended" or words to that effect, so I make a few transactions, few hundred quid in, few swtich transactions out every month and they have been happy for the last few years....

lellie

I don't use my overdraft either - I used about £100 at christmas before the january loan payment went in..

I haven't used it since.. - at the moment I've about £250 in my account with £350 going in this week...

should I put my overdraft in a saving account/mini cash isa? I've got a 1250 limit too..

jr666

I'm in the same position (£1250 untouched OD) and i've been thinking of doing somthing with it, but i would like to know the banks opinion on us being in the red for an extended peroid of time

Obviously if being £800 - £1000 in the red (prob a good idea to keep a bit handy) constantly is going to affect the banks (im with HSBC) credit scoring system on us negitivly then i dont know if its really worth it for about £50 a year tops in a 5% account (unless you want to do somthing a bit more exciting with it; i've got a good tip for the 3:20 at york )

Does anyone know the pros and cons of being OD for this reason??

J

misskool

I live on the edge of my overdraft, I take out as much as possible (think of it as an interest free loan) and stick it in the highest paying instant access saving account. I have it in A&L 5% at the moment. I move some money out when the situation looks dire. It's not bad but you do have to stick to your budget quite rigidly. A couple of big nights out or a shopping trip (or two..or three) means not eating so much for the next couple of weeks!

Also, if you are earn under the minimum tax allowance, which you probably do unless you have a high paying summer job, you fill in an R85 and you get tax-free interest. bonus!
I bank with HSBC so making use of their 8% regular saver (tax-free!), move the money from A&L into current a/c a few days before and then move into regular saver.

It's a bit of walking a tightrope but I figure that it will have earnt me a couple of hundred pounds interest at the years end that I didn't have to work for.