To ask if you have an overdraft?

[ohflowerofscotland]

I've been with my current bank for 7 years but have never had an overdraft.

Money is really tight this month and I'm thinking about applying for one (wouldn't be much, just a couple of hundred ££s).

Are they a bad idea?

They're not ideal tbh. A 0% credit card may be a better option providing you keep the limit sensible.

Nope never.

@WaterOffaDucksCrack Sorry if I'm being stupid here, but if you do go into the overdraft does the amount you've spent minus off when your accounts in the +?

@Lazypuppy Thanks. I didn't think they were a bad idea if the limit was quite low.

Sdad had one for £1.2k and has only just gotten out of it after a few years

Yes they are a bad idea, I have 2 and have done since I was 18.... I need to stop being lazy and get rid of them. Costs me around £30 a month for both of them.

As above, 0% credit card is probably better.

No I don't have an overdraft. They're a really bad idea and can cost you a LOT of money in fees and interest....
Have a look around at all the 'stuff' you have. Anything not pleasing to the eye? Anything outgrown? New but never used? Clothing BNWT? kids toys no longer played with? Anything you've not touched for 2 years? Takes up space. Chuck it on FB Marketplace.
Quite sure most people could release a couple of hundred from getting rid of 'stuff'.

No I don't think they are a good idea and it will mess up the following months budget as you will have to repay the overdraft before allocating the months money. Is there a particular reason for money being tight this month? Do you have emergency savings? Once you start getting into the mindset of money being tight then borrowing is the first option you are on a slippery downhill slide which some never get out of. Can you sell anything or do overtime or cut back on something else?

@Ariela Have sold some stuff on eBay but money is still tight I'm starting to panic and am exploring my options.

No. I used to have a 2k over draft, it’s paid off and never again. 2.5k of wages go in and you see £500 in your account. It’s not worth it, unless you can pay it all off the next month, otherwise you will always be in the red each month.

0% credit cards are usually for balance transfers

They're not a bad idea if you know you can get out of it fairly easily on next payday.

We've got one on our joint account in case we forget something or slightly overspend by accident one month, then we just put in extra the next month to cover it. Only ever been charged a few pence of interest and not gone far into it.

I suppose it depends on how much you intend to borrow on it.

No and no credit card either! They both freak me out 😬

They're not a bad idea if you're sensible. I have an automatic interest free overdraft on all my accounts. I very rarely use them but it's good to know it's there in case I accidentally go overdrawn.

I just want one for £100 on my current account to tide me through until payday. Wouldn't want a silly amount for an overdraft.

Not sure if it would be a wise idea or not but I've only got £30 to last me until the 25th and I have a young DC to feed

Have no family members I can ask to lend off either

It is better to manage by going without at the end of the month rather than rack up an overdraft or credit you will struggle to pay off for months or even years.

I do have an overdraft on my main current account and I have only used it due to laziness e.g. not managed to move money in time.

When I was earning much less I simply learnt to cut my spending by a lot if a month was tight. I used to use tricks from gleamed from the MSE forums on budgeting.

Luckily I use to socialise with a group of people where if you had a tight month/few months and someone knew, someone/a few people would pay for you to go out without making a fuss. This was/is better than birthday gifts.

I bank with First Direct and have the standard £250, which I rarely use

@ohflowerofscotland - if it's the choice of having a small overdraft or not feeding my children I'd go for the overdraft!!

@small2018 Absolutely. I would have gone without if I didn't have DC

If you use £100 overdraft this month, you'll have £100 less for next month... Plus fees/interest on the £100 too.

Everyone I know who has used an overdraft like you're describing has ended up stuck in a cycle of paying off the overdraft on payday, but then having to go overdrawn again because they don't have enough money. Add on the fees and they got sucked further and further into debt. Although I think the fees/interest situation has changed so it may not be too much to handle as a one off.

If you KNOW that on payday you can pay it off and manage next month on what's remaining (and other options have been explored) then it's not a spectacularly awful idea... But be very cautious!

I used to have an £800 overdraft on one account. I was always in it and basically saw it as my money. So say I got paid £1500 I would only have £700 show on the account so I would use that and then the overdraft again till the next month. The interest was about £8 per month.

A year or 2 ago I decided to clear it but was too scared to get rid of all of it so I reduced it to £200 as a ‘safety net’. I very rarely use it now but in the odd occasion I have I get charged approx £1 per £100 per month. It’s not a lot and I think it would be sensible to consider a very low overdraft (£200 or under). Just try not to get into the trap of seeing it as ‘your money’ and never increase it as that’s when things get more difficult.

I have a free one up to £250 I think. It’s a handy buffet on tight months. As long as you’re careful, this is what they are designed for!

They are a bad idea I've got one and as soon as I'm paid I'm back into my overdraft and the charges a month cost a lot. I had it for emergencies but it never worked like that. Perhaps try a 0% credit card they also help build your credit score up. Good luck in deciding you may be better at saving than me 👍

Buffer

@ohflowerofscotland if your sensible with it and it’s a short term fix it’s better than going into an I arranged overdraft.

1. an I arranged overdraft can negatively effect your credit score
2. often the charge is more than that of an arranged overdraft

Try to keep it a small amount that you can afford to repay in the next month or two.
You will pay for being overdrawn so it’s best to pay it off quickly Natwest charge £6 usage fee plus interest for amount over drawn each month.
An overdraft if approved can be ready in about 48 hours to use

The person who said a credit card would be better is in many ways correct if you use the credit card For over the counter transactions ( don’t use to withdraw cash as this is treated as something called a cash advance which has a hefty charge ) and you pay it back by the end of the month you won’t be charged interest most credit cards even if they are not 0% interest have a 56 day interest free period. But if you go over that then you do start to pay 💰 out.

Credit cards can also positively effect your credit score if used the correct way ( don’t miss payments or pay late or run up too high are some of the incorrect ways )
But these take around 14 days to get to you so it depends how quick you need funds

But be prepared next month will be leaner as you will have your normal bills plus what ever you borrowed to pay back

Your income will need to outweigh your outgoings in paper to be eligible as someone can not lend you money without being confident you can pay it back as part of being a responsible lender... other wise it’s not fair on you.

I hope that helps x x