Overdraft on my current account

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    Hi,

    I am 18 years old, and in full time employment on an apprenticeship. I currently earn 12k a year for my apprenticeship (not all that bad, right?), and when I am hired full time (already discussed between my boss and I), I will be looking at anywhere from 15k-19k (due to a bonus scheme).

    I currently have a £1000 overdraft on my bank account. I used £300 of it this month, and got paid, which then obviously used my wages to pay it back. I've paid all my direct debits and credit cards off completely. I don't see any use of using my credit card for actual purchases (other than to build my credit), and I now see my overdraft as my safety net if I have a tight month.

    Am I doing anything wrong by dipping into my overdraft each month? My wages pay it off instantly once a month, which is what I want. I still have around £600-£700 of actual money from my wages left when this happens.

    I read online that they can demand it back at any time (and in the T&C's..), how often do they just demand for their money back? Is my overdraft something I can rely on? Am I wrong in saying I can depend on it every month as long as I still have a job?

    I doubt I'll ever use the full £1000 (seeing as my wages only just cover that, and that is a terrible idea), but it's just there incase of family emergencies or whatever.

    Will my bank be happy with me using my overdraft like this? Or will they just demand it back and take it away? Just want to know if this really is a bad thing, or absolutely fine seeing as my wages pay it back monthly.

    Thanks!
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    (Original post by SouRz)
    Hi,

    I am 18 years old, and in full time employment on an apprenticeship. I currently earn 12k a year for my apprenticeship (not all that bad, right?), and when I am hired full time (already discussed between my boss and I), I will be looking at anywhere from 15k-19k (due to a bonus scheme).

    I currently have a £1000 overdraft on my bank account. I used £300 of it this month, and got paid, which then obviously used my wages to pay it back. I've paid all my direct debits and credit cards off completely. I don't see any use of using my credit card for actual purchases (other than to build my credit), and I now see my overdraft as my safety net if I have a tight month.

    Am I doing anything wrong by dipping into my overdraft each month? My wages pay it off instantly once a month, which is what I want. I still have around £600-£700 of actual money from my wages left when this happens.

    I read online that they can demand it back at any time (and in the T&C's..), how often do they just demand for their money back? Is my overdraft something I can rely on? Am I wrong in saying I can depend on it every month as long as I still have a job?

    I doubt I'll ever use the full £1000 (seeing as my wages only just cover that, and that is a terrible idea), but it's just there incase of family emergencies or whatever.

    Will my bank be happy with me using my overdraft like this? Or will they just demand it back and take it away? Just want to know if this really is a bad thing, or absolutely fine seeing as my wages pay it back monthly.

    Thanks!
    What are the charges and interest like on the overdraft? Sometimes, it's actually more expensive to use an overdraft than a credit card.

    Your bank probably won't demand it back, and if they do then they give you some notice. Make sure that you do keep paying money in regularly. Make sure that your credit history stays good - don't start taking out huge loans, and anything that you do have (usually mobile contracts) needs to be kept up to date with payments.
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    Its 1.5% a month with a £6 usage charge, which I'm more than happy paying for seeing as it allows me to not worry about money as much or have to check if I have enough on my account. My credit cards are like 40%, they are not worth the interest yet.

    Money will be paid in regularly as I have a secured job for at least another year. Am I fine using it as I am or is it just a terrible idea?
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    (Original post by SouRz)
    Its 1.5% a month with a £6 usage charge, which I'm more than happy paying for seeing as it allows me to not worry about money as much or have to check if I have enough on my account. My credit cards are like 40%, they are not worth the interest yet.

    Money will be paid in regularly as I have a secured job for at least another year. Am I fine using it as I am or is it just a terrible idea?
    Check the usage charge, because many of them are actually per day. If so, it still may be cheaper to use your credit card. With most credit cards, you don't get charged interest until the repayment date after the statement has arrived - this gives up to 56 days interest free.

    As an example, your credit card statement arrives on the 1st of the month, which shows all transactions since the previous statement. You'll then have a few weeks to repay this amount - it's typically 3 weeks (21 days). So interest won't be charged until 22 days after the statement date, or the 22nd of the month.
    So if you buy something on the 25th of the month before, you wouldn't be charged interest until 22nd of the next month with your credit card. With your overdraft, you're instantly charged £6 and 1.5%.
 
 
 
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