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Thread: Nedbank Overdraft

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    Nedbank Overdraft

    Please help me. I took a bank overdraft of R2700 with nedbank and used the entire amount. Now i'd like to pay them back but dont know what the procedure is. Do i pay them a monthly amount or is a lump sum paid when i get paid into my account. I dont know how it works so any information will be appreciated. Thank you

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    How an overdraft works

    Quote Originally Posted by google
    An overdraft is a revolving credit facility loaded into your Cheque account. The facility gives you access to additional cash to cover any unplanned expenses and is reviewed every year. You should also make regular deposit into your Cheque account to keep the account up to date.
    How is an overdraft paid back?
    Quote Originally Posted by google
    Unlike repaying loans, which are fixed repayments over a set period, overdrafts are a form of revolving credit, much like credit cards. This means that you can add to an existing overdraft (so long as you remain within your authorised overdraft limit) or pay it off completely one day, then dip into it the next.
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    Thank you for your response.
    So does that mean that i pay the amount off in instalments or do i have to pay that amount once-off?

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    Diamond Member Blurock's Avatar
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    An overdraft is essentially a 30 day account to enable you to bridge the gap between selling and collecting payment from your debtor. For an individual it is to bridge the gap between when you run out of money during the month until you get your salary at the end of the month. NB! It is a short term facility and should be settled at least once every month. If not, you pay interest on interest, as interest is calculated on the daily outstanding balance and added every month.

    A revolving credit facility is a medium term facility (reviewed annually), but essentially works like an overdraft with regards to interest calculation. Basically a top-up loan with a minimum monthly repayment. Credit cards operate on almost the same principle but is the most expensive form of finance which should be avoided like the plague!

    A term loan or HP finance agreement is a contract between parties whereby an amount is advanced either to buy an item or a cash deposit into an account. This is also a medium term facility mostly up to 5 years. It has a fixed structure with capital and interest calculated and added up front, to be repaid in equal installments; monthly, quarterly or annually.

    A bond is long term finance up to 20 years and is used to purchase property, which is a long term asset.
    It is important to understand that long term assets are financed by long term finance and short term cash flow by short term finance.
    Choose your finance options carefully and ask for advice if unsure.
    You are not going to finance the purchase of a car on an overdraft and you are also not going to take out a bond on your house for that overseas holiday.
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    An overdraft ... for people like me and many others ... it is a means for banks to get you by the nuts and squeeze interest out of you for as long as you have the overdraft.

    For the 30 years i have had an overdraft ... it just sits at the max month after month ... much like the credit card ... once you are in debt you spend your entire life trying to get out of it.

    The banks dont make it easy to get out of ... i thought it would be a simple task where i could just contact the bank and reduce it month by month as and when i could afford to... not so simple.

    The reason which makes sense ... the money is made availble to you regardless if you use it or not ... hence "the fee" for not using it.

    I decided at the beginning of this year to get rid of all debt ... by Feb 2021 i am gona be completely debt free ... i started by paying off all HP and loans ... then i got rid of my credit card limit ( apparently you cannot make it zero ) so it has a R100 limit ... the last is the busisiness overdraft ... some will say you need an overdraft ... if my overdraft was R1 000 000 ... it would be at R1 000 000 ... for people who have short arms and long pockets ... no problem ... for us who enjoy spending money ... not so easy.

    I had to apply to Standard bank for it to be reduced by a set monthly amount (R500 per month) ... as of this month it is down R3000 ... it has made abosolutely no difference to the monthly cash flow ... just less interest to pay to the bank ... its like paying off a loan with way more interest

    For some of us ... it is better to take a loan and just pay it off every month ... what i do is buy a new vehicle pay it off ... sell it take the money and go on holiday ... when i get back I buy a new vehicle and pay it off ... so every 5 year i get a holiday ... the only problem is vehicles are getting so expensive ... to replace my van now is gonna cost R700 000 ... by the time you add interest and insurance ... the monthly installment is twice my bond ... which reminds me ... its time to increase my rates again.

    Other reasons overdrafts can be a bad thing ... you have a few bad months ...you hit the limit ... then spend years trying to recover ... this virus is gona squeeze the living daylights out of the general public and silly things like credit cards and overdrafts ... debt recovery are gona get people into a lot of trouble.
    Comments are based on opinion...not always facts....that's why people use an alias.

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    Diamond Member Blurock's Avatar
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    Financial discipline is getting harder all the time. There are so many temptations and once you get used to a certain lifestyle it is very hard to scale back. The other issue is that real income is declining - we are getting poorer and sometimes we have to make use of credit. To scale back to being debt free requires much sacrifice and family should do it together. No use one saves and the other is still competing with the Jones's.
    The rewards of being debt free is worth the effort. It sets you free as you can make decisions without having to wait on someone's approval. You do not have to worry about accounts, exceeding limits or that dreaded phone call. Start by saving small amounts and increase savings as your debt declines. You'll be surprised how quick it starts to accumulate.
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    Diamond Member Blurock's Avatar
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    South Africa must have the most expensive banking system in the world. Clients are screwed at every opportunity. Maybe because we have the most gullible consumers in the world. There are so many hidden costs, it is a real minefield and not easy to compare banking products due to all the extras added on.

    One example is that, apart from paying interest, there is that dreaded "facility fee". That is also additional to the "service fee". E.g. when you buy a car on HP, you negotiate an interest rate, but then get charged an additional fee just for having the account! Same applies to an overdraft. You may never use the overdraft on your personal account, but the fee is part of the package and is levied every month.

    Fortunately, there are some free banking available although that is linked to having an investment etc with the bank. The new electronic banks are not worth the trouble as far as I am concerned, as they may have good electronic systems, but they know nothing about customer service, even worse that the main street banks!
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    Quote Originally Posted by Blurock View Post
    South Africa must have the most expensive banking system in the world. Clients are screwed at every opportunity. Maybe because we have the most gullible consumers in the world. There are so many hidden costs, it is a real minefield and not easy to compare banking products due to all the extras added on.

    One example is that, apart from paying interest, there is that dreaded "facility fee". That is also additional to the "service fee". E.g. when you buy a car on HP, you negotiate an interest rate, but then get charged an additional fee just for having the account! Same applies to an overdraft. You may never use the overdraft on your personal account, but the fee is part of the package and is levied every month.

    Fortunately, there are some free banking available although that is linked to having an investment etc with the bank. The new electronic banks are not worth the trouble as far as I am concerned, as they may have good electronic systems, but they know nothing about customer service, even worse that the main street banks!
    "Cash is king" even the government knows this ... ever tried to pay home affairs with anything other than cash or your license renewal etc ?

    I cant believe that crimminals havent got smart YET ... if i ever get in a tight squeeze and need cash quickly ... i would put a team together in a white avante with tinted windows (so many of them around being used for Uber services) ... and just go from one department to the next and rob all those fools who sit loaded with cash to pay for ID ...passports ... license ... 10 people in a que for license renewal ... almost R10 000 (have you seen how long these ques are at the post offices ...and there is a good chance because they draw cash fo the payment ... they got a little extra ... no security ...then you just move from there to home affairs ...people que from early hours of the morning ... you could make a few thousand in cash before the doors open with no fear of unexpected clouds of marking paint ... easy targets easy money.
    Comments are based on opinion...not always facts....that's why people use an alias.

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    Quote Originally Posted by Starryl View Post
    Please help me. I took a bank overdraft of R2700 with nedbank and used the entire amount. Now i'd like to pay them back but dont know what the procedure is. Do i pay them a monthly amount or is a lump sum paid when i get paid into my account. I dont know how it works so any information will be appreciated. Thank you
    Just a note ... most banks offer a 30 day bussines credit card with a limit ... if i recall that credit card balance must be paid within 15 days of the end of the month ... i stand to be corrected.
    Comments are based on opinion...not always facts....that's why people use an alias.

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    Diamond Member Blurock's Avatar
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    Quote Originally Posted by ians View Post
    Just a note ... most banks offer a 30 day bussines credit card with a limit ... if i recall that credit card balance must be paid within 15 days of the end of the month ... i stand to be corrected.
    Applies to most credit cards. If you pay off the full balance after month end or within your allocated payment window, you do not pay any interest. Just be aware of the fees charged!
    Excellence is not a skill; its an attitude...

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