My bank as sent me a letter giving me a £500 overdraft.

What does it mean, I'm not sure.

Can I go £500 overdrawn without paying intrest, is it like a loan?

You can go £500 overdrawn, but they will charge you interest on it (usually).

If you don't need it get rid.

I have never had an overdraft or asked for one so I can't say for sure, but I can't imagain a bank giving you something for nothing. It could well end up costing you more than you think.

Check with your bank to see if they are charging you for this service ... as some do!

The interest you pay is on the amout which you are overdrawn by ...... as Nick2 says if you don't need it (and don't be temped to us it as a loan cause you will have to re-pay it sometime) get rid!!!

Originally posted by slimsid2000
I have never had an overdraft or asked for one so I can't say for sure, but I can't imagain a bank giving you something for nothing. It could well end up costing you more than you think.
It means you can go £500 overdrawn without being charged a penalty, usually you will pay interest on it. Check the details. Most accounts come with some kind of overdraft facility as standard.

You'll almost certainly pay interest, even on an agreed overdraft.

Also, don't forget that the bank can claw this back at any time they please. Unlike a structured debt - like a loan - where they agree with you repayment terms and can only (usually) pull in the money if you don't keep to your side ofthe deal, an overdraft is unstructured and so they can, if they wish, write to you and say 'Overdraft revoked' with immediat effect.

And yes, they DO do this if you get in to financial dire straits, so best thing is to ignore the letter or take it on but don't use it. Turning down the overdraft is the better bet as it removes the temptation, IMHO.

Joe

I think its either my first £100 or £200 that I get interest free, after that its 8.889% per year or somet :confused: ahh well :?

don't take it up - been there got the t shirt - not a good idea - all you will do is get yourself in debt
very soon all you will do each month with your wage is clear the overdraft and then you will use the overdraft over the comning month ansd then pay it of agian and then use it again - never ending until you pay it off in one go and have you wage on top
if you ever need one desperately just ask for one they will give it

Usually when Banks send out these letters terms and conditions (T&C) apply.

It is VERY, VERY important to read the T&Cs VERY, VERY carefully; these Banks do NOT give anything away for nothing and I would expect them to charge interest on all the money borrowed within the scope of a £500 overdraft and not necessarily at preferential or competitive rates.

If you do not earn enough to run an overdraft then like everyone else here, please forget about it because it could lead to very messy problems and take years to resolve. That you ask this question indicates little financial experience so I'd strongly recommend ignoring it.

If you don't need it get rid. [/B]If you dont need it, use your will power to keep out of it. Dont get rid of something that could be potentially useful in an emergency.