Configure your ground level

By Slow Dad - December 16, 2016

Avoid incurring extortionate overdraft interest charges by setting your current account ground level to £500 rather than £0.
The town where I grew up is prone to heavy fog in the winter months. It has an airport that is surrounded by several mountains. That can make for a tough day at the office if you are a pilot wanting to land your plane in the middle of winter!

Landing a plane on a foggy day is challenging.

Some years ago the air traffic control computer systems were being replaced by a newer, shinier, more expensive version. Inevitably the job went out to tender, and was won by a large consultancy submitting an undercooked bid.

Six months after the original software “go live” date had passed the new system limped into user acceptance testing. A couple of early morning flights were volunteered to act as guinea pigs for the new system.

Due to heavy fog the first flight scheduled to make use of the new systems was going to be making an instrument only landing. As the plane descended on final approach the fog momentarily cleared, only to reveal the side of a mountain directly in the path of the plane!

The pilot took evasive action, the plane narrowly missed crashing into the side of the mountain, and the 150+ passengers on board went looking for a change in underwear.

A post incident review discovered that the new software had mistakenly set the ground level 5,000 feet lower than it actually was. The event could have been lifted straight out of the plot for that fine traditional Christmas movie, Die Hard 2.

Would you prefer to fall onto cement or a cushion?

It was the first time it occurred to me that ground level could be configurable.

On a visit to Queenstown, New Zealand I stopped by Kawarau Bridge to watch people bungy jump 43 metres off a perfectly good bridge. Each jumper was asked where they wanted to have their jump finish: near the water, touching the water, or into the freezing cold river. Now there is an incentive to be honest about your weight!

Near the line, touching the line, or over your head?

Once again it occurred to me that ground level could be configurable.

Many banks offer a “free” overdraft on their current accounts, giving those customers who tend to live on the financial edge a little bit of breathing room if they overdraw their account. Get this wrong however and many banks will charge both a penalty fee on the already overdrawn account and then interest on the overdrawn balance at an eye watering rate of 15%-20%.

Good planning and sensible budgeting should mean most of us never need worry about our accounts becoming overdrawn. However a larger than expected direct debit charge for winter utility bills or similar may take us closer to the edge than we would be comfortable with.

One way to avoid incurring those bank fees and overdraft interest charges is to configure where you set the ground level on your current account.

So what?

Avoid near misses or going in over your head by ensuring your current accounts have a balance cushion. Think of it as self-insuring against becoming overdrawn, and set your ground level at £500 rather than £0.

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