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Do you need an overdraft to see you through to January payday?

With still more than a fortnight until payday for most of us on monthly pay, are you sure you can get to the end of the month without a little financial assistance from your bank or building society?

The overspend at Christmas will be starting to bite hard for many, especially with the dreaded credit card bills due to hit the doormat any day now.

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If you want to avoid some additional expense in the form of unauthorised overdraft fees from your bank at a time when you can ill afford it, then it’s time to get that calculator out.

You need to get hold of your account balance and a mini statement showing your current financial position, then make a list of all the cheques, direct debits and standing orders still to go out as well as any cash that you’ll need to spend before your monthly salary or pension reaches your account.

If your calculations reveal that you will go overdrawn or that you will exceed your existing overdraft limit, it’s time to give your bank a call to arrange a limit or increased limit to see you through the toughest financial month of the year.

Ignoring the situation and letting your account drift into excess by £100 for a couple of weeks may not seem like a big deal, but if I tell you that such lethargy could cost you between £50 and £120 in unauthorised fees, I’m sure you’ll take the matter a little more seriously.

There may be other times of the year where your budget gets a bit stretched due to unforeseen expenses, such car repairs or home appliances breaking down, so it’s worth setting up an overdraft facility all year round to cover you just in case of need.

Usually there is no charge for arranging an overdraft facility, and even if you do make use of it from time to time, the interest charges will be far less painful than if you slip into the red without prior authorisation.

I know next Christmas seems a long way off, but whilst you’re suffering from the current post festive financial hangover, why not set up a standing order to start squirreling some money away each month from now. At least you won’t be in the same predicament with your money come January 2009.

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