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    Overdraft query

    Just been online (bank of scotland), i was thinking about taking out a loan after i save up a fair chunk, having saved up over a grand , im told on the site i can up my overdraft to £1000 from £350.

    My querys are, is this better than a loan?, if i spend it all and fail to pay it all back is it ok just to pay the interest and then pay it al back when the date for renewal is up ( 6th june).

    Just wondering in case of the worst, like if i get laid off or something!, paying the interest wouldnt be a problem!, also may cut back my hours to part time so i wont be earning the 1k a month needed to pay back when into the overdraft, would be useful if i could pay it all back in a year!

    Any advice would be nice!

    JB

    13 Comments

    better to have a loan than an overdraft and that is your readies...they can recall an overdraft anytime.

    Original Poster

    Not much chance of them demanding it back out of nowhere, surely?

    What do you need the money for?

    they can recall it then add on fees when you cant pay it

    jaybizzle;2260358

    Not much chance of them demanding it back out of nowhere, surely?



    It did happen to me a few years ago (although it was a student account) with Barclays. They gave me a short amount of time (6-8 weeks I think) to pay back a £1k overdraft.

    Original Poster

    Random, why did they demand it back?, my banker friend tells me that the banks love you spending the overdraft as they make alot of money from the interest etc.

    a loan should be at a lot lower rate of interest. If you know you need the money a loan would be far better IMO

    Original Poster

    Loand demand set payments of a fair amount each month tho, not to bothered about interest rates, £8 a month is easy to pay incase of something bad happening, bide me sum time.

    Well if you only want to free up some cash for a short time then an overdraft is ok. But you may want to look at a credit card with 0% on purchases. You can then buy all your shopping petrol use it in the pub ie use it everywhere that accepts cards and you will free up lots of cash every month. But to make it worthwhile you must factor in how you will pay it off or transfer it to a 0% balance transfer card, eg get a card like the Bank of Scotland - All in One Card MasterCard which has 0% on purchases for 10 months then after get a 0% balance transfer card with transfer rate of 2.5% or less then you will save lots.

    jaybizzle;2260409

    Random, why did they demand it back?, my banker friend tells me that the … Random, why did they demand it back?, my banker friend tells me that the banks love you spending the overdraft as they make alot of money from the interest etc.



    Aah, it was a student account, and the overdraft was interest free. That might be why they wanted the money back :whistling: :-D

    Get a credit card with 0% on purchases then keep moving the balance around when the introductory offer ends.

    Original Poster

    Gonna go for the oerdraft , at the worst , it would be only for a few months, maybe pay the interest in that time , then start to pay it back as fast as i can!

    Your overdraft on your current account is most likely based on what your income is per month. So as long as your wages continue to be paid into the account and you do not go overdrawn the overdraft should remain stable. Banks tend to remove overdrafts when no money is entering the account for a while or if you incur charges a lot.

    And yes, on student bank accounts you usually get an interest free overdraft which usually changes when you finish study or graduate. Most of the time it will change and base itself on your income.. therefore if you have no income then you will be offered no overdraft.
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