# Can somebody explain bank overdraft facility to me please?



## laoisfan (14 Sep 2006)

hi

i am a new user. just recently heard of this website from "The Last Word" on TodayFM.

i am thinking (just thinking...hence the thread) of applying for a bank overdraft. just a small sum e..g 250.

how does an overdfaft work? obviously the bank have to make their money.

thanks --laoisfan

ps. i am also looking at my finances & are looking at ways to tighten up so i do not have to apply for an overdraft.


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## roxy (14 Sep 2006)

Alot of accounts/banks will give you a free overdraft facility, depends on the bank. Check it with them and see, you might already have one.


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## Carpenter (14 Sep 2006)

An overdraft is basically a pre-approved short term credit facility, where your bank will agree to allow your account become overdrawn (i.e. you take out more money than you have in your account).  You are of course charged interest daily on the overdrawn amount.  Overdrafts are generally easier and quicker to set up than say, arranging a personal loan, but the interest rates are a little higher.  If you exceed your approved overdraft limit you will be hit with an additional punitive charge.  Unfortunately an overdraft facility, unless wisely used can easily be abused and can perhaps "conceal" poor spending patterns where somebody is actually living beyond their means. Clever use of a credit card (repayment in full each month) can be a useful tool for somebody who needs a little help with their cashflow from month to month.


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## laoisfan (14 Sep 2006)

thanks for all the replies - much appreciated and they will all be considered.

i am looking at my spending habits i.e. mobile, tv, etc etc.

any other suggestions would be appreciated.

--laoisfan


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## Carpenter (14 Sep 2006)

laoisfan said:


> i am looking at my spending habits i.e. mobile, tv, etc etc.
> 
> any other suggestions would be appreciated.
> 
> --laoisfan


Spending habits have been considered in detail on this site many times before, try the search facility.  However you'll probably find that the usual targets for cutting spending goes something like this:

1. Do you have unnecessary insurance/ payment protection?  Are you overinsured/ paying unnecessary premiums for cover you don't really need?

2.Do you shop around for things like home/ car insurance, telecom services, lower cost banking facilities, cheaper credit cards etc?

3. Do you really need your car, can you use public transport/ walk?  Can you use a smaller car/ drive less often, car pool or avail of public travel subsidies from work?

4. Do you subscribe to premium TV cable services etc and do you need them?

5. Do you eat a lot of convenience foods/ takeaways or shop in the more expensive convenience stores?

6. Things like the daily newspaper, shop bought sandwiches, snacks, coffees and drinks each day can add up to a significant cost- before you even get to work.

7.  Are you availing of all tax reliefs/ credits available to you?


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## ClubMan (14 Sep 2006)

laoisfan said:


> i am looking at my spending habits i.e. mobile, tv, etc etc.
> 
> any other suggestions would be appreciated.


Live within/below your means and not on credit as far as possible would be my main tip.


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## laoisfan (14 Sep 2006)

ClubMan said:


> Live within/below your means and not on credit as far as possible would be my main tip.



cheers ClubMan - i will take a look at all of those things. thanks again everybody!!


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## nlgbbbblth (23 Sep 2006)

overdrafts should swing to credit at least 30 days a year.


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