Paying off overdraft

[iphonedyou]

Hi all,

Well I've had a fantastic welcome to this forum, so I thought I'd go ahead and post a thread!

Wondering what your opinion is on paying off my overdraft. First, a quick background...

I'm a uni student, on placement year, living at home. Earning a good salary for a placement in construction industry in this economic climate. Saving 33% of salary towards a house deposit. My girlfriend essentially has a deposit already but is in no hurry to move out. Neither am I. I don't have an awful lot saved as yet, but I'm getting there slowly. Fully intend to save hard when I graduate for a year or two, to top up the savings. Savings split 80-20 between cash ISA and low-medium risk fund.

So to the question. My bank offers me an interest free overdraft. It's only £500, but I have to go to an interview every year where they pry into my incomings, outgoings, all that jazz. It means taking time off work, and frankly I resent the intrusion (I know it's their money, but still, it's not particularly nice, is it?) So I got a phone call the other day, didn't really want to take any time off work to go to this interview, so I called back and told them I'll just pay the overdraft off. I've got to thinking I'm cutting off my nose to spite my face - I'll be taking money from a 2.5% cash ISA and using it to pay off an overdraft that isn't costing me anything.

I guess my question is - is it THAT stupid a thing to do? On paper I guess it is. In reality - is getting rid of the overdraft (money owed, although 0%) a good way to start your post uni financial life?

Hopefully this made sense, and I haven't bored you all.

Thanks

[northandy]

If you paid it off from your ISA money it will cost you £17 in lost interest over the 12 months. How much is a days pay? (I know it won't cost you if you use holiday) but parking, fuel etc.

To be honest for such a small amount I'd just pay it off.

[iphonedyou]

When you put it that way! £17 isn't a lot.

OK, well thanks for that! I just figured I was making a typically stubborn statement by telling the lady I'd pay it off rather than go to the interview! But yes, £500 isn't a lot of money in the grand scheme of things. Will be nice to leave with one less debt, too.

[Stevenj214]

I still have a 2k interest free overdraft from RBoS from my student days. No interview ever. Switch to something like that and whack the whole lot in an ISA. Make £70 per year. Every little helps.

[iphonedyou]

Good thinking, actually! Was looking at moving bank once I paid this off anyway, as the overdraft is the only thing keeping me at my terrible bank!