How does an overdraft work?


J

Jake

I have a First Direct current account with a free overdraft. So what
happens when I spend the overdraft and go into - credit? When do they
ask for the money back? And are there hidden charges somewhere? Surely
you cant just spend the overdraft limit with no time limit to pay it
back without any charges?
 
Ad

Advertisements

N

Neaco

I have a First Direct current account with a free overdraft. So what
happens when I spend the overdraft and go into - credit? When do they
ask for the money back? And are there hidden charges somewhere? Surely
you cant just spend the overdraft limit with no time limit to pay it
back without any charges?
Haven't got a FD account so wouldn't know, but it is standard in most UK
banks that an OD facility is subject to status and a minimum amount being
paid in at a regular interval each week or month (or even year). It is
normal to have a clause stating that an OD is immediately repayable upon
demand, but unless you do something really bad, then they don't usually
insist you do that. That clause is more psychological then anything. If
you stop having a regular income or abuse the overdraft limit then they will
probably take it away, and then ask you to repay it, and usually over a set
period depending on how large it is.
 
N

Nick Read

I have a First Direct current account with a free overdraft. So what
happens when I spend the overdraft and go into - credit? When do they
ask for the money back? And are there hidden charges somewhere? Surely
you cant just spend the overdraft limit with no time limit to pay it
back without any charges?
Its 'Fee Free', i.e. no arrangement or usage 'fees' , however they do
charge interest on it, so it isn't really completely free.


Nick
 
V

Vadim Borshchev

I have a First Direct current account with a free overdraft. So what
happens when I spend the overdraft and go into - credit? When do they
ask for the money back? And are there hidden charges somewhere? Surely
you cant just spend the overdraft limit with no time limit to pay it
back without any charges?
Usually, Terms and Conditions cover that sorts of issues. Like, £28 fine
for going above overdraft limit. And your obligation to pay money on
bank's request.

Vadim
 
A

A *********

free overdraft means no penalties, but you get charged interest at 9.9% EAR.

see http://www.firstdirect.com/banking/current_account_indetail.shtml

they will be ok unless you exceed the overdraft limit. if you spend the
overdraft limit, interest will take you over the limit and then you will be
penalised.

they are NOT giving you interest-free credit, so don't just go and spend the
money
 
J

Joe Hunt

Neaco said:
Haven't got a FD account so wouldn't know, but it is standard in most UK
banks that an OD facility is subject to status and a minimum amount being
paid in at a regular interval each week or month (or even year). It is
normal to have a clause stating that an OD is immediately repayable upon
demand, but unless you do something really bad, then they don't usually
insist you do that. That clause is more psychological then anything. If
you stop having a regular income or abuse the overdraft limit then they will
probably take it away, and then ask you to repay it, and usually over a set
period depending on how large it is.
Student account overdrafts, however, are allowed upto around £1250 in your
first year, maxing out at £1600 in your third year, all interest free for
upto three years after you graduate. Fantastic ;-) Especially when some
are in an ING account @ 5pc and some in P.Bonds which have already won me
£50 within three months.

Joe (who will miss such facilities, no doubt, when he graduates)
 
Ad

Advertisements

N

Nick Read

free overdraft means no penalties, but you get charged interest at 9.9% EAR.
....or 15.9% if its their 'Cheque Account' where you receive paper
statements through the post, as opposed the internet only 'Bank
Account' when it is 9.9 %


Nick
 
T

Tim

A ********* said:
...or 15.9% if its their 'Cheque Account' ...
.... or 5.75% if it is linked to your offset mortgage ...

... where you receive paper statements through the post ...
I receive paper statements through the post for *both* "Cheque" *and* "Bank"
accounts!

... as opposed the internet only 'Bank Account' when it is 9.9 % ...
.... or 5.75% if it is linked to your offset mortgage.
 
N

Nick Read

... or 5.75% if it is linked to your offset mortgage ...


I receive paper statements through the post for *both* "Cheque" *and* "Bank"
accounts!
Really?! Do you have to pay for the statements on the Bank Account or
have they changed their policy on this? I asked them some time ago if
I could have a Bank Account but still receive paper statements and
they said no. That was the only reason I didn't change my Cheque
Account to Bank some time ago.

Nick
 
T

Tim

Tim said:
Yep!

Do you have to pay for the statements on the Bank Account ...
Nope.

... or have they changed their policy on this?
Probably. I think I took out mine back when they did send statements, and
they have continued. I think *new* accounts don't get them ...

I asked them some time ago if I could have a
Bank Account but still receive paper statements
and they said no. That was the only reason I didn't
change my Cheque Account to Bank some time ago.
They're a friendly enough bunch - why not try asking them if they would do
it anyway?
 
Ad

Advertisements

N

Nick Read

Yep!


Nope.


Probably. I think I took out mine back when they did send statements, and
they have continued. I think *new* accounts don't get them ...


They're a friendly enough bunch - why not try asking them if they would do
it anyway?
Thanks, that's exactly what I did. They have apparently just recently
changed the terms on the Bank Account so postal statements are now
completely free, however it seems you have to ask for them. They don't
advertise the fact, and anyone opening a new account wouldn't receive
them by default. As a result I immediately changed my account with
them from Cheque to Bank on the condition that I get 'proper'
statements, which they were happy to do!

I'm really glad you mentioned this, because I would never have known
otherwise, and it now means I get cheaper overdrafts and credit
interest of a not too bad 2 %, instead of a paltry 0.1 %!

Cheers,

Nick
 
Ad

Advertisements


Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Similar Threads

Overdraft penalties and fees 4
Bankers drafts and overdrafts 4
Overdraft 4
overdraft 8
Overdrafts 2
Overdrafts. 1
overdraft 3
overdraft 5

Top