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overdraft - does it need to be clear for a time?

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  • 20-01-2010 8:58pm
    #1
    Random
    Closed Accounts Posts: 19,080 ✭✭✭✭


    so i have an overdraft. i have the t&c somewhere in the house and i will root them out and i will check my specific t&c later on but a couple of general questions for now if i can please ...

    does it need to remain clear for a full month in a year? someone said to me that there's was cancelled because they were using it too much?

    assuming it's always cleared on payday etc. isn't that what it's for?


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    #2
    copacetic
    Subscribers Posts: 16,586 ✭✭✭✭copacetic


    the banks fleece you totally on the interest rate so they are happy for you to be in your overdraft all the time as long as you don't go over your limit.


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    #3
    3DataModem
    Registered Users Posts: 3,997 ✭✭✭3DataModem


    Note that overdrafts are cancellable on demand.... I.e they can withdraw it anytime and you have to pay it back immediately.


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    #4
    xoxyx
    Registered Users Posts: 1,811 ✭✭✭xoxyx


    I live in my overdraft which is very stupid because of the interest rates. I've never been cancelled and have had it over two years. Am hoping to get a loan to clear it next week!
    But, there's no problem with being in it if you're willing to pay the interest generally. The only thing you need to watch out for is if you're applying for a mortgage (and maybe some other loans too). My bank told me I'd need to have a certain amount of days a year (not sure how many, but think it's about 20) with your account in credit.


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    #5
    BankMan
    Closed Accounts Posts: 143 ✭✭BankMan


    copacetic wrote: »
    the banks fleece you totally on the interest rate so they are happy for you to be in your overdraft all the time as long as you don't go over your limit.


    You couldn't be more wrong. On several levels.

    There's usually a condition obliging you to return the account to credit at least once per month and for at least 30 days in the calendar year. If you pass a year with no credit days, it's possible the facility will be revoked.


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    #6
    copacetic
    Subscribers Posts: 16,586 ✭✭✭✭copacetic


    BankMan wrote: »
    You couldn't be more wrong. On several levels.

    There's usually a condition obliging you to return the account to credit at least once per month and for at least 30 days in the calendar year. If you pass a year with no credit days, it's possible the facility will be revoked.

    rubbish, I have a facility for years with one of the main banks with no such conditions. (Apart from the penal interest rate)


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    #7
    BankMan
    Closed Accounts Posts: 143 ✭✭BankMan


    copacetic wrote: »
    rubbish, I have a facility for years with one of the main banks with no such conditions. (Apart from the penal interest rate)


    Well, not all banks operate the same way. I have, however, been providing these facilities for years, so it's not rubbish.

    On another note, if the rate is so penal, why do you continue to use it ?


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    #8
    Toots
    Administrators, Business & Finance Moderators, Society & Culture Moderators Posts: 16,920 Admin ✭✭✭✭✭Toots


    copacetic wrote: »
    rubbish, I have a facility for years with one of the main banks with no such conditions. (Apart from the penal interest rate)

    No this isn't true. Your bank may not have cancelled your overdraft, but if you root out your ts&cs I'd be willing to put money on it that this condition is there somewhere. Depending on each person, the bank may allow you to continue to operate the overdraft without achieving the required 'credit days' (in fact I know quite a few customers who operate their accounts this way), however if they decided to withdraw the facility, they would be perfectly entitled to.


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    #9
    copacetic
    Subscribers Posts: 16,586 ✭✭✭✭copacetic


    Toots* wrote: »
    No this isn't true. Your bank may not have cancelled your overdraft, but if you root out your ts&cs I'd be willing to put money on it that this condition is there somewhere. Depending on each person, the bank may allow you to continue to operate the overdraft without achieving the required 'credit days' (in fact I know quite a few customers who operate their accounts this way), however if they decided to withdraw the facility, they would be perfectly entitled to.

    How much are you willing to bet exactly? My bank can withdraw the facility at any time, that a standard condition, however days in credit do not affect the facility, they affect the interest rate.


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    #10
    Toots
    Administrators, Business & Finance Moderators, Society & Culture Moderators Posts: 16,920 Admin ✭✭✭✭✭Toots


    copacetic wrote: »
    How much are you willing to bet exactly? My bank can withdraw the facility at any time, that a standard condition, however days in credit do not affect the facility, they affect the interest rate.

    Who do you bank with?


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    #11
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    Toots and Bankman are 100% correct. If you read the T&C'S you'll find its stated there. An a/c with an o/d must revert to credit for 30 days of the year. Anyhow an ideal o/d should not be anymore than a weeks or months wages thus allowing it to revert to credit. The bank should not cancel an o/d unless you are going over it regularily and / or turnover drops. Even if t/o did drop as long as you were staying within your limit you'd be fine. The only thing that might happen apart from a higher interest rate is that your credit grade might drop thus effecting your capacity to borrow further funds.


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    #12
    Priapus
    Closed Accounts Posts: 114 ✭✭Priapus


    stepbar wrote: »
    Toots and Bankman are 100% correct. An a/c with an o/d must revert to credit for 30 days of the year. .

    +1


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    #13
    Christine45
    Closed Accounts Posts: 22 ✭Christine45


    I got a letter from AIB last week telling me my OD was up for review. Apparently you need to be forty something days in credit and I was only twenty something. This had never been a problem in the past but then again I was putting large sums of money in per month. I had a massive OD because I had a larger earning capacity back then but today they don't want to know me!:rolleyes: On a serious note they canceled the OD and said I could pay it back per month which was a massive relief.


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    #14
    samhail
    Registered Users Posts: 2,699 ✭✭✭samhail


    can i just confirm that if i have an over draft of 1000 euro and i run with -500 euro in the account for the month there is interest paid on that ? or is it only over 1000 ?


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    #15
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    You pay interest (daily) on the cleared (overdrawn) proportion of your overdraft. Meaning that if you are overdrawn by 100eur, you pay interest on 100 eur. Another example, if you lodge a chq for 200 eur, technically you are +100 but you pay interest until the chq is fully cleared (assuming your a/c was in overdraft before you lodged the chq).


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