Bank Overdrafts

[Monts]

With bank overdrafts on current accounts, do you get penalised for staying in the overdraft? I mean, with a credit card you have to pay off an amount each month or you get a fine. Are overdrafts the same?

Also, if you have, say, a £500 overdraft facitlity available, but have 2 current accounts. Does this mean you can have £500 on boh accounts, or is th £500 a total for you as a customer?

Thanks.

[Peevemor]

With bank overdrafts on current accounts, do you get penalised for staying in the overdraft? I mean, with a credit card you have to pay off an amount each month or you get a fine. Are overdrafts the same?

Also, if you have, say, a £500 overdraft facitlity available, but have 2 current accounts. Does this mean you can have £500 on boh accounts, or is th £500 a total for you as a customer?

Thanks.

Each account is treated separately.

If you stay within the authorised limit, you will pay interest and charges (30p per transaction sort of thing) which, depending on how much you use the account, shouldn't amount to very much. If you go over the limit, chances are you will get slaughtered - the same for if you go into the red on the other account if no overdraft facility is in place - therefore you should juggle between the 2 accounts to ensure that both are 'happy'.

[Monts]

Each account is treated separately.

If you stay within the authorised limit, you will pay interest and charges (30p per transaction sort of thing) which, depending on how much you use the account, shouldn't amount to very much. If you go over the limit, chances are you will get slaughtered - the same for if you go into the red on the other account if no overdraft facility is in place - therefore you should juggle between the 2 accounts to ensure that both are 'happy'.

Thanks for that.

So, say I didnt have an overdraft, but I was informed I could have an overdraft for up to £500, would that mean I could have £500 on both accounts, making it basically a £1000 overdraft?

[Peevemor]

Thanks for that.

So, say I didnt have an overdraft, but I was informed I could have an overdraft for up to £500, would that mean I could have £500 on both accounts, making it basically a £1000 overdraft?

Only if the offer was made, ie. you got a letter, for each account.

[matt_100]

it will probably be just on the one that the letter is referring to. Best to go into a branch and check or call them

[Sylar]

With bank overdrafts on current accounts, do you get penalised for staying in the overdraft? I mean, with a credit card you have to pay off an amount each month or you get a fine. Are overdrafts the same?

Also, if you have, say, a £500 overdraft facitlity available, but have 2 current accounts. Does this mean you can have £500 on boh accounts, or is th £500 a total for you as a customer?

Thanks.

a) If you remain within the overdraft limit (without exceeding it), you don't get a "charge" per se, you would only be debited interest from your account - this is accumulated in the same way as interest credited onto your account at the end of the month - the average amount of overdrawn balance is totalled against the debit interest rate (which you'll find on the banks' website under interest rates and charges) - if you're £200odd quid into a £500 o/d, you're maybe talking a few quid.

b) overdrafts are account specific - if you have £1500 going into one account and have a £1000 o/d but another account which only sees £250 credits, then you wouldn't be eligable for the same amount as you have on your other account as the overdraft must be facilitated against the volume of credits going into the account in question.

Hope this helps...

[Monts]

a) If you remain within the overdraft limit (without exceeding it), you don't get a "charge" per se, you would only be debited interest from your account - this is accumulated in the same way as interest credited onto your account at the end of the month - the average amount of overdrawn balance is totalled against the debit interest rate (which you'll find on the banks' website under interest rates and charges) - if you're £200odd quid into a £500 o/d, you're maybe talking a few quid.

b) overdrafts are account specific - if you have £1500 going into one account and have a £1000 o/d but another account which only sees £250 credits, then you wouldn't be eligable for the same amount as you have on your other account as the overdraft must be facilitated against the volume of credits going into the account in question.

Hope this helps...

Yes that answers it perfectly. Thank you.

And thanks to all the other helpers too. Much appreciated!

:thumbsup:

[Swoosh]

While we are talking about overdrafts, I have one of £300. However, I have never used it.
I remember reading about if it is an unauthorised overdraft you will get penalty charge plus high interest.
Since my account can go to an overdraft of £300 does that mean that is an authorised over draft and I will only be charged interest on this amount. However, if I go to £350, that would be an unauthorised overdraft and would incur a penalty charge?

Does this make sense?

Probably better not knowing the answer, least if I do not know the answer I will not use it for fear of getting charged. :P

[Peevemor]

Yes that answers it perfectly. Thank you.

And thanks to all the other helpers too. Much appreciated!

:thumbsup:

Unless you have great self control, avoid taking an overdraft for much more than you need. It's easy to spend money that you don't have to then find yourself at your limit at the end of every month. This is fine until you do need to find extra money for something (eg. car repairs) then, unless you have savings, you end up going back the the bank, cap in hand, asking for more - in this way you can find yourself going from no overdraft, to the the £500 offered and then up to £1k within a few months no problem.

[Peevemor]

While we are talking about overdrafts, I have one of £300. However, I have never used it.
I remember reading about if it is an unauthorised overdraft you will get penalty charge plus high interest.
Since my account can go to an overdraft of £300 does that mean that is an authorised over draft and I will only be charged interest on this amount. However, if I go to £350, that would be an unauthorised overdraft and would incur a penalty charge?

Does this make sense?

Probably better not knowing the answer, least if I do not know the answer I will not use it for fear of getting charged. :P

You've understood correctly. :agree:

[Swoosh]

You've understood correctly. :agree:

Thanks mate, that question has been bothering me for some time :thumbsup:

[vein]

Unless you have great self control, avoid taking an overdraft for much more than you need. It's easy to spend money that you don't have to then find yourself at your limit at the end of every month. This is fine until you do need to find extra money for something (eg. car repairs) then, unless you have savings, you end up going back the the bank, cap in hand, asking for more - in this way you can find yourself going from no overdraft, to the the £500 offered and then up to £1k within a few months no problem.

:agree: Was in that cycle myself a few years ago. Once your in the overdraft it can be very hard to get back out of it. Very good advice Mr Peevmor!

[Peevemor]

:agree: Was in that cycle myself a few years ago. Once your in the overdraft it can be very hard to get back out of it. Very good advice Mr Peevmor!

... so you end up taking a loan to pay off the overdraft. The loan repayments take up a bit of your salary so you find the end of the month difficult. You ask the bank for a new, teeny-weeny overdraft to help things a bit but they refuse as you already have an unsecured £1k loan, so you find yourself even worse off because you slip £30-50 in the red at the end of a long month and - WHAP!!! - here come the charges.

We've all been young and daft - now I'm a tight fisted auld git!

Just call me Rod. :greengrin

[Monts]

Unless you have great self control, avoid taking an overdraft for much more than you need. It's easy to spend money that you don't have to then find yourself at your limit at the end of every month. This is fine until you do need to find extra money for something (eg. car repairs) then, unless you have savings, you end up going back the the bank, cap in hand, asking for more - in this way you can find yourself going from no overdraft, to the the £500 offered and then up to £1k within a few months no problem.

Thanks for the advice :agree:

Im usually quite good with money, hence the lack of knowledge on overdrafts :greengrin, but a few months back i needed quite a few repairs on my car. I couldnt afford it then, so I stuck it on my credit card, which was fairly new and had that 'no interest to be paid for 6 months' thing. That 6 months is just about to run out, so I want to pay off my credit card now before i get charged massive interest rates.

Worthwhile?

[Peevemor]

Thanks for the advice :agree:

Im usually quite good with money, hence the lack of knowledge on overdrafts :greengrin, but a few months back i needed quite a few repairs on my car. I couldnt afford it then, so I stuck it on my credit card, which was fairly new and had that 'no interest to be paid for 6 months' thing. That 6 months is just about to run out, so I want to pay off my credit card now before i get charged massive interest rates.

Worthwhile?

A bank loan should be cheaper.

[Monts]

A bank loan should be cheaper.

Really?

I always considered loans to be the last option.

What makes it cheaper?

[Peevemor]

Really?

I always considered loans to be the last option.

What makes it cheaper?

Ordinarily, the interest charged on a loan will be lower than that on an overdraft.

[Monts]

Ordinarily, the interest charged on a loan will be lower than that on an overdraft.

As far as I can see I would be paying 1.5% per month (http://www.bankofscotlandhalifax.co.uk/bankaccounts/interestrates.asp#overdrawn_balances)on an overdraft.

Surely loans would be more than that?

[The_Todd]

As far as I can see I would be paying 1.5% per month (http://www.bankofscotlandhalifax.co.uk/bankaccounts/interestrates.asp#overdrawn_balances)on an overdraft.

Surely loans would be more than that?

Aren't interest rates usually advertised per annum?

[Peevemor]

Aren't interest rates usually advertised per annum?

Exactly :agree:, 1.5% per month compounds to nearly 20% p.a.

[Swoosh]

I am no expert, but cant he just sign up for a new credit card with a new company? That way he will get a new period with 0% and can transfer the money over to the new card?

[Steve-O]

Thanks for the advice :agree:

Im usually quite good with money, hence the lack of knowledge on overdrafts :greengrin, but a few months back i needed quite a few repairs on my car. I couldnt afford it then, so I stuck it on my credit card, which was fairly new and had that 'no interest to be paid for 6 months' thing. That 6 months is just about to run out, so I want to pay off my credit card now before i get charged massive interest rates.

Worthwhile?

Transfer the balance to another new credit card with 0% on balance transfers - you could potentially get a year or more interest free doing this as loads of companies offer this to get people on board :agree:

[vein]

Transfer the balance to another new credit card with 0% on balance transfers - you could potentially get a year or more interest free doing this as loads of companies offer this to get people on board :agree:

But whatever you do, dont spend on the new card or you will be hammered for interest.

[Steve-O]

But whatever you do, dont spend on the new card or you will be hammered for interest.

Unless it's 0% on purchases too, which is often the case :agree:

[vein]

Unless it's 0% on purchases too, which is often the case :agree:

Aye but the 0% on purchases only usually lasts for 3 months or so and the balance transfer for a year or more.

So three months in you start getting charged interest on those purchases.

Best idea if transfering balances is to make the transfer then stick the card away in a safe place and never use it until the full balance has been paid.

[Swoosh]

If you are intrested, Bank of Scotland are offering 10 months intrest free on balance transfers and on purcheses.

[Sylar]

If you are intrested, Bank of Scotland are offering 10 months intrest free on balance transfers and on purcheses.

I'd advise against it - HBOS are about to go through a major overhaul in the coming months.

Plus their customer service is disasterous - I should know, I've provided it for 2 years :greengrin

[Monts]

I'd advise against it - HBOS are about to go through a major overhaul in the coming months.

Plus their customer service is disasterous - I should know, I've provided it for 2 years :greengrin

Im with HBOS :worried:

[Swoosh]

I'd advise against it - HBOS are about to go through a major overhaul in the coming months.

Plus their customer service is disasterous - I should know, I've provided it for 2 years :greengrin

Do Share whats the overhaul and hows it going to affect us customers?

[Sylar]

2 points, both interlinked.

a) they fell WELL short of getting the extra £4billion capital they were searching for, which means additional borrowing, which in today markets, is not good business as it will mean savings and investments in the bank will be utilised, thus providing an extra risk with customers' monies.

b) as a consequence of A, Spanish banking giants BBVA are considering a swoop to takeover HBOS which will result in a considerable amount of changes (not necessarily for the bad, but these things take time to manifest - remember the upheaval when Halifax and Bank of Scotland merged?). Abbey National have gone from strength to strength since becoming part of the Santander bank, but the talk of BBVA is making a lot of the majority shareholders edgy, despite them rising dramatically at the prospect.

[LeithWalkHibby]

2 points, both interlinked.

a) they fell WELL short of getting the extra £4billion capital they were searching for, which means additional borrowing, which in today markets, is not good business as it will mean savings and investments in the bank will be utilised, thus providing an extra risk with customers' monies.

b) as a consequence of A, Spanish banking giants BBVA are considering a swoop to takeover HBOS which will result in a considerable amount of changes (not necessarily for the bad, but these things take time to manifest - remember the upheaval when Halifax and Bank of Scotland merged?). Abbey National have gone from strength to strength since becoming part of the Santander bank, but the talk of BBVA is making a lot of the majority shareholders edgy, despite them rising dramatically at the prospect.

Here's hoping that many of the braying HBOS sheep will now be emptied.