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?

I don't think I'd trust myself with a credit card! Had one previously and spending easily spiralled our of control. I was 19 and very stupid.

@ohflowerofscotland so
Sorry your in the position you are ... if you can talk to citizens advice looking into financial Assistance as sounds like you won’t be in much of a position to repay it back so it’s a short term fix with long term implications x x

I have a £200 one with lloyds, its quick and easy to open one online. Like you OP, I only needed a little buffer to see me until the end of the month for food but I was stupid and spent all of the £200 rather than just what I needed and now 2 years later I still have to pay it off everyone month cos I always go back into it and pay the charges.

Get a credit card.

Try first direct their overdraft is free to use up to £250

Can you get a referral to the food bank?

Can you hunt round for pennies? Sofa, bottom of bags etc

Do you have any Tesco vouchers?

Find more things to sell.

Do what you need to do OP. As long as you manage to it sensibly, you'll be fine. My DH and I both have them (£1000 and £750 respectively). They don't often get used, but I feel reassured knowing they're there if we had an emergency. We both have excellent credit scores too; having an overdraft has certainly not affected these. I pay £6 a month for mine, and hubby pays £25 a month for his account (but gets travel insurance etc too as part of that). Totally worth it in my opinion.

I have an overdraft limit but we rarely use it. Its handy to have it as a backup

I pretty much live in mine. £150 and I pay about £6 a month in OD fees. If I start earning again I'll maybe get rid of it but I guess it'll be there if I needed it. For larger amounts I'd say an 0% interest credit card is better.

Not the most helpful of tips here but remember to check any loyalty cards for points. Eg Tesco Clubcard or boots advantage. Might be enough for a few days food or shampoo if money is tight xx

I have a £1,000 OD which I use sometimes when there's a weird overlap between pay day and bills. I otherwise stick everything on a credit card and pay it off in full each month. I would rather use a 0% interest CC than an OD any day.

I have one, at one point it was over £3000, but now I stay around £250 max. It should be paid off this month. Its not ideal but its free with First Direct and it helps.

OP In your position I would apply for the overdraft online. It’s not the end of the world to have one. If your circumstances change and you don’t need it I’m sure you can cancel it.
I’m sorry your partner has left, that’s shit. Have you checked on entitledto to see if you’re eligible for any extra assistance?
Hope you aren’t too stressed, I’ve been in your position and the worry can consume you. It will be ok x

ohflowerofscotland -not sure if this will be of any help to you, but to tide you over and feed the children, is it worth you approaching a Food Bank to help you out? rather than take out a loan/overdraft. I do wish you well and hope the situation eases soon.

I have one. Some months I go into it and other months I don’t. It’s fine so long as it’s not too much and you’re not going to be forever stuck in it. Also some over drafts are really expensive! But I’ve never been charged more than a few quid for mine.

OP I have an arranged £100 overdraft, no fees. I would say in three years I have gone into it twice - and it has had no impact on my following months. I believe they are safer than credit cards as CCs have such a higher limit and it's hard to get out of, same if you have a big OD.

I would say no issue in a £100 one, go for it. Has helped me a couple of times.

Thanks everyone for your great advice and kind words.

I've applied for the overdraft and it is ready to use now, feel so relieved now that there is a bit of safety net for me and DC.

I have a 5k overdraft. It’s fine. Sometimes I spend a year in it, other times I don’t. I’m self employed.

Honestly, it’s fine. And the cost of a small overdraft is tiny.

We have 2 2k ones but we don’t use more than the free £250 with First Direct and the free £50 with HSBC. Also have a credit card which I clear every month.

It’s all about managing correctly our total interest bill last year was 41p

It’s also worth noting the rules for all banks overdrafts change next April 2020.

There’s a good podcast that came out today all about it cashchats with Andy Webb.

No, I've never seen the point of them. For many years I didn't need one because our earnings were significantly above our expenses. Then when I was on maternity leave and money was a bit tight, I went into the bank (about something else) and the helpful assistant asked whether I'd like him to arrange an overdraft. It sounded useful - no risk of going overdrawn if an unexpected expense drove us into the red - so I said Yes please.

He updated my details on the computer and then apologised that he couldn't offer me an overdraft as my earnings were now too low... yes, exactly why I needed one!!

Overdrafts are one of the most expensive ways of borrowing money, they are simply a payday loan. Think of them this way rather than an overdraft and you will be less likely to use them or at least only as a last resort.
Even if it's interest free and costs you nothing it can still impact you with any future credit application as using overdrafts are viewed negatively by lenders.

Could I suggest that you speak to an advisor at your bank. I realise that you have already applied online but doing it online doesn't give you any help with budgeting or info on how to actually pay the overdraft off. Speaking to someone can go through your finances to see if they can save you any money anywhere or reduce interest you are paying etc. They can help with any budgeting issues or whatever your situation is and then help you with the best way to pay off any overdraft quickly.

Don't do it!

Overdrafts are great the first month you get it. I took out a £100 overdraft because we were short and really struggling.

Worst mistake I've made, I went from having £700 a month to £800 the first month. Then had to pay the £15 charges for using it the following month.

Then I realised my mistake with having it because the next month my wages of £700 were paid and they automatically take £115 of my wages to pay the overdraft off. So I was short of £115 that month meaning I ahd to use the £100 overdraft.. This was 4 years ago.. I'm still in that cycle and can't get out of it. I'm paying £72 a year in charges to access my own full amount of wages.

It's really not worth it!

I have an overdraft, it wasn’t ideal when I was reckless with my money a few years ago and it took me ages to get back to red. The problem though was that it was too big for what I could afford (3k) so when I gave in to temptation and used it my wage didn’t always bring me back to red again. I now have a small overdraft which I use for emergencies. I don’t like using it though as it’s so disheartening on payday to see half of your wages going towards it, then you’re that much down on your wages for that month and it gets into a bit of a cycle.

However, I’d rather use my overdraft than a credit card, the temptation to overspend on those is massive and I can’t stop myself.

I have a fairly large overdraft facility in case of emergency. Between this and my credit card, I would be able to put my hands on a couple of grand very quickly if I needed to.

It would have to be a sufficently large emergency that spending the money would be more urgent than figuring out how to repay it. Something like the unexpected death of my parents would probably qualify, or falling ill overseas.

I hope I never need it, but having the option is very reassuring.

I had a huge one from my student account, which they started charging interest on not long after I graduated. Terrible idea giving students what they see as a free grand or two!

After some truly shockingly bad financial decisions in my early to mid twenties I had a debt management plan and had paid it all off at age 30. Now I have no debt at all and probably wouldn’t get any anymore anyway due to bad credit.

If you’ve just had an expensive month and have more money coming in next month or can realistically tighten the purse strings to pay it off over a few months then it’s not the worst idea. What’s a shit plan is getting one if you have no realistic way of paying it off anytime soon, or if it’s to cover your usual costs as they won’t go away and the debt will spiral as you try to cover the costs of living plus the cost of the ever increasing debt.