overdraft. is this ok ?

dollyk

Hi all, we have a 2,000 overdraft with a.I.b. my hours have been cut a lot in the last few months so i have been using my overdraft to keep up with my mortgage etc.
I have just checked my bank statements ,
and since Jan , i have been in credit for only a few days of the month.
Will the bank take my overdraft ?.
sorry but im not really up on these things.
We have the overdraft 4 years,
but never used it this regular..
thanks for any advise .

SteoL

dollyk wrote: »

Hi all, we have a 2,000 overdraft with a.I.b. my hours have been cut a lot in the last few months so i have been using my overdraft to keep up with my mortgage etc.
I have just checked my bank statements ,
and since Jan , i have been in credit for only a few days of the month.
Will the bank take my overdraft ?.
sorry but im not really up on these things.
We have the overdraft 4 years,
but never used it this regular..
thanks for any advise .

There's usually some sort of clause in the od agreement stating if the account does not revert to credit for a certain period (30 days or so) additional charges will apply. Doubt the bank will call it in (although they are entitled to) but can't say for certain.

coylemj

SteoL wrote: »

There's usually some sort of clause in the od agreement stating if the account does not revert to credit for a certain period (30 days or so) additional charges will apply. Doubt the bank will call it in (although they are entitled to) but can't say for certain.

You wouldn't normally be penalised for being in the red for so long, as long as you don't exceed the limit but if you're permanently in the red they might decide that you should convert the overdraft to a term loan. Normally an overdraft facility is to allow you to dip into the red very now and then but not on a permanent basis.

SteoL

coylemj wrote: »

You wouldn't normally be penalised for being in the red for so long, as long as you don't exceed the limit but if you're permanently in the red they might decide that you should convert the overdraft to a term loan. Normally an overdraft facility is to allow you to dip into the red very now and then but not on a permanent basis.

I know BOI definitely had such a clause in the terms of my own overdraft with them a few years ago. The fee did apply at the time also, IIRC it was an additional 1.75% charge. I could be wrong about the rate %. I did end up coverting my OD to a term loan a number of years ago as the OD was getting too permanent for my liking and it is something I would recommend the OP do if possible.

user1842

coylemj wrote: »

You wouldn't normally be penalised for being in the red for so long, as long as you don't exceed the limit but if you're permanently in the red they might decide that you should convert the overdraft to a term loan. Normally an overdraft facility is to allow you to dip into the red very now and then but not on a permanent basis.

I have had an overdraft with AIB for the past 5 years. I have been in the red for 5 years . Overdraft not taken away. Why would they, there are making a fortune in interest off me.

dollyk

dmclean1842 wrote: »

I have had an overdraft with AIB for the past 5 years. I have been in the red for 5 years ::(. Overdraft not taking away. Why would they, there are making a fortune in interest off me.

how much interest do they get per year ... even a rough guess ..thanks

unclebill98

They may review the overdraft and your high dependence on it will be a factornwhen it comes tonthem making a decision on it.

user1842

dollyk wrote: »

how much interest do they get per year ... even a rough guess ..thanks

Will have a look at my statements and get back to you

user1842

dmclean1842 wrote: »

Will have a look at my statements and get back to you

About €140 yearly (11.95%). Im in the black for about 3 days a month when my wages come in.

Also I think there might me a yearly fee but I cant find that one on my statements.

dollyk

am thinking of taking a 2 month break from my mortgage to clear my overdraft, good idea or not ...

unclebill98

That would be best described as a short term gain for a long term pain.

Avoid if you can.

dollyk

really ?, but it cant be that much to pay at the end of my term,
i think they spread it over the remainder of my loan, dont they?
also i wont have to pay it back, if you know what i mean..

unclebill98

Ok, let's say your mortgage is 1k per month.

After the two month break your mortgage repayment will adjust to make sure the term stays the same. So it may increase a little but the interest charged maybe more than if you just tried clearing the overdraft a different way.

Also, banks don't give payment breaks very easily, so only take one if you really need it.

dollyk

me again, ok lets say i use my 2k to clear my credit cards
they are what is putting me in the red,
and then cut them . would that be a good idea.?

3DataModem

Using O/D to clear C/C - good idea.

Taking mortgage break to clear O/D and C/C - good idea.

Why? Because the interest rate on O/D and C/D are much higher. Save money in long run.

But two caveats;
(1) Ensure you don't just run the C/C and O/D up again! Get the facilities removed. You'll feel so much better.
(2) When you have the money, overpay the mortgage a little. This will mean you will revert to the original term.