Student Overdraft!

Louikins · 27 June 2017 at 11:24AM

Hello,

I have a student overdraft of £2000 in which I've held for about 5-6 years now. My bank is with Natwest and my current account is now a "Select" account, as it was previously called "Student" and then to "Graduate".

I am in full time work earning enough to repay this overdraft but I am terrible with saving my money. I can only access increasing/decreasing my overdraft manually online and I do not want to keep having to log onto my account each time just to reduce my overdraft by so much.

This overdraft has been the bane of my life for the past 6 years or so, my credit score is so poor, but I am able to get 2 phone contracts at the same time if needed and thats the maximum I can get.

I've walked into my local branch to ask for a loan to repay this overdraft in full and then to pay off the loan in monthly payments which would be 10 times easier for me to handle. They turned me away as at the time, I was working but earned less and was a contractor working "temporarily".

Will they accept me this time knowing that I am in full time employment with higher then minimum wage pay? Should I switch banks? I am desperate to pay back this overdraft but my credit score is stopping me from doing this, and I would love to improve my credit score asap.

Thank you!

National_Debtline · 27 June 2017 at 11:59AM

Hi Louikins

The first thing to check is whether you can afford the monthly fees and charges that are being added to the overdraft. Start by completing a statement of affairs (SOA) and post it on here. Other users will give you helpful hints and tips to maximise the amount of money you have spare each month http://www.stoozing.com/calculator/soa.php.

If you can afford the interest and charges (plus any other debts you may be liable to pay at the moment) and have spare money left over, discuss with your bank reducing the balance of the overdraft at an affordable rate each month. This will require you to make sure you stick to the figures on your SOA though.

Whilst you could consider taking out a loan to pay off the overdraft bear in mind that you will pay interest on the loan, and depending on your overall circumstances you may be turned down, particularly if you still have a poor credit history. If the overdraft is simply not affordable then there will be other debt options the free debt advice agencies can advise you on. Good luck.

Susie
@natdebtline

EssexHebridean · 27 June 2017 at 12:12PM

You're approaching this from the wrong direction.

It *might* be that a loan would work out cheaper on interest than the fees on the overdraft - but have you checked this?

If you can afford set payments monthly to a loan then you can afford those same payments to the overdraft - so that's your first port of call. You say you're earning enough to pay it back, so give yourself a kick up the bum and get on and do it. Stop using "being terrible with saving money" as an excuse - because it IS an excuse. Logging in to your banking to change the overdraft amount takes - what, a couple of minutes? Honestly - it's not exactly a day-spoiler is it!

As Susie suggests above - get yourself an SOA drawn up - make it accurate, and then that's your budget. That gives you a surplus that should be left over at the end of the month and that is the amount you should be aiming to decrease that overdraft by. Now take that surplus figure and multiply it by 12. A year from clearing the overdraft that is the amount you COULD have in savings if you sort yourself out on this. What are your long term goals? To buy a house? A new car? A holiday somewhere fabulous? You can only get those things if you clean up your finances - and that in itself ought to be an incentive, no?

My very personal experience tells me that it's very easy to say "oh I'm terrible with money!" where what I actually should have said was "Oh I'm too lazy to sort out my money". The point at which I faced that was the point at which I turned things about. I suspect there is little to stop you doing the same. For what it's worth, since I first joined here we've paid a loan off early and paid our mortgage off in 14 years rather than the 25 it should have taken. We've also paid upfront for a kitchen and bathroom complete refurb and replaced MrEH's car without resorting to finance. It can be done.

Louikins · 27 June 2017 at 12:14PM

Yes I can afford the interest and charges the bank gives me every month. I will have to speak to my bank further about this.

Will my credit score improve once my overdraft is paid off? Or even if I start to pay it off in certain amounts?

glentoran99 · 27 June 2017 at 12:21PM

forget your credit score its an irrelevant number, just pay of the overdraft the same why you say you would with a loan

EssexHebridean · 27 June 2017 at 12:33PM

Louikins wrote: »

Yes I can afford the interest and charges the bank gives me every month. I will have to speak to my bank further about this.

Will my credit score improve once my overdraft is paid off? Or even if I start to pay it off in certain amounts?

Stop thinking Score and start thinking history. At the moment you're constantly in your overdraft - to a financial institution this looks like you can;'t manage your money, and so makes them less likely to see you as a good risk as in their eyes, if you can;'t manage your money from one month to the next - and more to the point you have a long history of this - they will be concerned that this will mean bills will go unpaid.

Ignore the "score" you see online - it's just a number. Start to think of the bigger picture - if you have £50 to lend to one of two friends, one of them says "my credit score is 950!" but you know from the past that every time you've lent them money they've been slow to pay it back or not paid it back at all, and the other said "My credit score is 633" but each time you've loaned them money in the past they've paid you back promptly, which one will you lend the money to? For what it's worth, the numbers I used there relate to the systems used by two different credit reference agencies and both actually indicate a similar sort of level - it's just different systems are used!

Honestly, you don't even really need to speak to the bank - just start seeing "good with money" as something attainable, and you can get that OD gone and start to improve your future prospects.

Louikins · 27 June 2017 at 2:10PM

Thank you for all of your replies, very helpful Indeed! I shall start paying off my overdraft once I get paid this week! I just need that kick up the bum and I really appreciate everyone's advice! It's the only debt I'm currently in, once that's gone I should be in the green again

EssexHebridean · 27 June 2017 at 2:47PM

Louikins wrote: »

Thank you for all of your replies, very helpful Indeed! I shall start paying off my overdraft once I get paid this week! I just need that kick up the bum and I really appreciate everyone's advice! It's the only debt I'm currently in, once that's gone I should be in the green again

Good for you! Go for it, and remember to post back here and let us know how you get on!

lika_86 · 27 June 2017 at 3:22PM

Check with your bank first about how they approach reducing your overdraft ie. does asking to reduce it count as a change which would mean they credit check you again? It shouldn't really but you wouldn't want lots of checks on your credit record.

EssexHebridean · 27 June 2017 at 3:36PM

If you can do the change online through your internet banking as OP has indicated that she can, then they'd have to inform you if it lead to a credit check that might show on the file I would have thought.

Bearing in mind that overdrafts can be recalled at zero notice by the bank, I'd always be in favour of having as little interaction with them as possible over it!

Louikins · 27 June 2017 at 4:44PM

Yes perhaps I should just deal with it online and keep it shtum with the bank. I am aware that asking can sometimes affect your credit score and I've read that they can recall my overdraft whenever they want. Needs sorting asap as it's been a very long time since I've opened the overdraft!

Student Overdraft!

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