Current Account Balance

WeeCuppaCha

I have been saving hard for almost 2 years now, trying to get a decent deposit together for a house purchase. I was planning to approach the banks this year for mortgage approval but am holding tight for now until the lay of the land becomes clearer. I am a single parent, single applicant, so it’s been a challenge to say the least!

I save a set amount into a couple of different accounts each month. I try to keep a balance of €500 or thereabouts in my current account at all times and if I have more than that at the end of any given month, I lob the excess into a credit union account.

I just got to wondering how much others tend to keep in their everyday current accounts? Should I aim for more or less going forward? I’m not sure how others use their current accounts. Is it another form of saving or just a petty cash type set up for you?

Geuze

I would say what's most important for bank to see:

(1) regular saving, easy to identify origin and destination on statements

(2) no use of overdrafts

(3) sensible use of credit card

Cona

It doesnt really matter where you keep your money as long as you can provide evidence of accruing savings every month. That savings can be in current account, savings account, credit union etc.

You will need to provide 6 months banks statements and other account statements when applying for mortgage. So, seeing as you are now going to wait to buy, it would be a good time to get your account in good affairs. That is, setup a savings account or credit union account and transfer as much savings as possible into this account for the next 6 months.

Make It Real

As per above, it doesn't matter where the money is held.

You can (and should) provide statements from all bank accounts where you hold money.

PHG

As what others have said.

Also think about what your bank is charging you. I got rid of my UB account cause KBC off me free banking as lodge more that €2k per month.

Think UB charged me something crazy like €80+ last year so got rid.

WeeCuppaCha

Thanks all for your input. Maybe my original post wasn’t clear. I think I have a good handle on what is needed for a strong mortgage application and I have worked hard at getting to that point.

I was interested to find out what constitutes a ‘healthy’ current account. Is it simply an account that never goes overdrawn, no returned DDs/SOs or any gambling transactions etc. Or would it be an account that is firmly in the black at all times. And if the latter, what constitutes a good balance in your everyday current account?

Or maybe it doesn’t matter at all?!

advertsfox

The banks like to see organisation, it's not all about cash balance.. Multiple accounts are recommended in terms of the following:

- Bills Account (for incoming salary and all outgoing direct debits, standing orders ONLY - if your bills are always €2000 a month, leave €2100 here)
- Savings Account (paid into on pay day by standing order, the same amount each time with any surplus being sent manually - your CU is perfect)
- Cash Account (this is your daily living / fun monthly cash account to live off after everything is paid / accounted for in your Bills account).

With this method, the banks can see your ins and outs very easily. They'll see your savings accumulate and your cash account being used just for yourself... independent of bills - this can go to a low balance at the end of the month (even close to €0) as long as the bills account / savings take priority first by default. This also helps guarantee no missed debits or bills (a huge no no). You are doing probably better than 90% of people by having at least €500 in the account at the end of the month but this leaves room to assign yourself a monthly cash budget (high recommended) and save even more.

Banks dont really mind the odd gambling transaction but it's not really worth the hassle if you are saving. In my experience, banks dislike overdrafts the most. Credit cards are great for proving credit / repayments so as long as you hit the minimum (my CC was 70% used when I applied for the mortgage but I never missed a payment).

I made a big similar post here before you may like to read. Best of luck!

WeeCuppaCha

That is very useful @advertsfox, many thanks.

coylemj

WeeCuppaCha wrote: »

I was interested to find out what constitutes a ‘healthy’ current account. Is it simply an account that never goes overdrawn, no returned DDs/SOs or any gambling transactions etc.

Yes. With a current account, you need to avoid the negatives like the ones you've described. They cause red flags which will come up on an internal credit check.

WeeCuppaCha wrote: »

Or would it be an account that is firmly in the black at all times. And if the latter, what constitutes a good balance in your everyday current account?

The balance doesn't matter so forget about being 'firmly' in the black. If you run the balance down to 1c just before you get paid, it will not count against you. It might even be a plus, shows you have a tight grip on spending. But staying in the black is really all that matters - if you do not have an overdraft facility.

I'd disagree with people who say that being overdrawn is a minus, the bank gives this facility where they think you can manage it. If the use of an overdraft facility acted against you when applying for a loan then it would constitute the bank deliberately setting a trap for unsuspecting customers! If you get and use an overdraft facility, you should get the balance back in the black at least once per quarter. That should keep them happy. But staying permanently in the red will count against you.