Dealing with overdraft reduction.

Jamesb15uk

Hi, I've had a scout around and I cant find too much on this subject, hope Ive not missed anything. And hope i'm not posting in the wrong section.

Right I have a student account which has already been reduced from £2000 down to £1150 and it is set to be reduced at the start of Sept by £650. Which to me is a considerable amount, especially as I'm currently looking for a job.

I asked my bank (Abbey - :mad:), if they would be able to extend my overdraft, which they were not happy to do. They did offer to set up a payment plan which would involve paying a flat £50 a month until it was paid off. I asked her about interest and she said it's not as bad as a normal loan... vague much?

I do know a friend of mine got one of these payment plans and they locked him into paying quite a lot of interest with it. (I'm telling him to come on here, because what they have done is actually all but illegal).

On the other hand, this would grant me a god send right now, I'd only have to pay back £600 over the next year, rather than £650 right now (which is impossible!).

Sorry for long post, my main question is, what are people opinions on these things, and is there a better alternative? Thanks in advance

LilacPixie

well without full details its hard to say.

How far into the overdraft are you??? Personally i would apply for a basic bank account elsewhere get your benefit/grant etc paid into that and transfer as much as you can monthly until it is totally gone.

Jamesb15uk

Thanks for the reply.

I'm currently at -£381.68
Which leaves £768.32 available and after the £650 reduction only £118.32 available.. which is very little given I have £260 a month rent.

I already have a second account which was opened as a parachute from the whole bank charges fiasco, only I was lucky enough to not have my original account closed.

I know its ideal to let them reduce it and I won't actually be over it, but I was kind of relying on that buffer while i'm finding work.. I wont even be able to pay Septembers rent if I do this though.

I'll probably get slapped for suggesting this, but I was thinking of withdrawing my full available limit (£768.32), and putting it into my other account, along with benefits, which will pay rent, bills and food for say a max of two months which I really should be able to find a job within (I already have a few applications in). I would then sort a payment plan for the maxed £1150 overdraft, which I know may cost me more over a couple of years.. but it will be more manageable while getting paid than right now while i'm not working.

Hmm.. I just dont know, I cant think a way around not doing it, and although it will cost me more, of course it won't cripple me, it is a tiny sum and I have no serious out goings.

LilacPixie

Problem with that idea is when they reduce your limit then you will be constantly over you overdraft and the charges could be crippling (not got a clue what abbeys charges are like) Remember while this OFT case is ongoing charges have not yet been deemed unfair or unreasonable.

If you are not working surely you are in receipt of full housing a council tax benefit?? if that is the case you will have your JSA for food and utilities and any other debts can go whistle.

Jamesb15uk

I'm fully accustomed to abbeys charges, because it was around 2 years ago when they were slapping them down on me, but thats all water under the bridge thanks to this site.

The idea being when I set up a payment plan, they write off the overdraft and close the account, effectively replacing it with a loan. (thats how I have understood it anyway).

As regards to my benefits, I'm not 100% as to what I'm getting. I have only just applied this week you see so waiting to find out how much I will get. I have applied for housing, but not the council tax benefit.. problem there is my house mate has that in his name which stops me getting it. (But still having to chip in ).

Jamesb15uk

Luckily I don't have to worry about any hideous debt as I paid off the most important debts during my last job. All that is left now is this £1150 of student overdraft, and the student loan which I've not even scratched the surface of yet (I wont even be thinking about that for a while!).