What is the best to reduce an overdraft?

hatsepsovet

Hello to all of you guys; hope you can give me some advice.

My OH and I have separate accounts each both of which have an overdraft of £2k.

We each have a credit card; total owed between us is around £3.5k with APR around 17%.

We would like to have a joint account from which all the bills would be paid and into which both of our wages would be paid into. This is to make keeping an eye on incomings but mainly outgoings easier and enable us to start budgeting.

What is the best way forward for us?

We have a bad credit rating (so applying for 0% credit card is not really an option).

Is there an account which we can open and transfer our overdrafts to and at the same time arrange for our wages to be paid into it?

Many thanks.
h

woohoo_postingid

That would involve a bank account with a £4k overdraft facility. How likely do you think it is that you will be offered one?

Do you know that your credit rating is poor or do you just think it is?

If you can't get a new card, try contacting your existing card providers and explain that you wish to transfer a balance to them, you will probably get a better APR and basically you can swap the money owed onto the other's card.

fairylights_2

We were in a similar situation in the summer. We went into Lloyds (OH's bank) and chatted with the manager. I took in a spreadsheet of all our monthly expenses and said I DID NOT WANT an overdraft or debit cards, just an account with facilities for DD. He said that was not a problem, and advised that we should keep our overdrafts where they were. What essentially happens is that the pay goes into our own accounts, then we transfer enough to cover all bills each month (including the extra pennies for annual things like house and car insurance, and road tax). What's left in our accounts is ours to spend. Why not try to do it that way round? Don't move your overdraft, which could be very difficult to do, but run your bills account in credit all the time? That way, you can pay off your overdrafts at the rate you can cope with without worrying that your bill payments might bounce

hatsepsovet

Dear fairylights,
thanks for your post. I thought it was a great idea. I have one question though; how did you decide how much money should each of you put into the account? My OH and I would really like to have one account only not to feel that I was paying for this and my OH is paying for that... It's psychological really but that's how we're doing it at the moment and it's not working out.

How about doing it the other way round? Opening a joint account into which pay in both of our salaries, then opening 1 more account for monthly direct debits (money to go into this account from the joint account) and then pay a certain amount into our overdrawn accounts and our credit cards?
It looks like a long-winded way of doing things though... hmm

What do you think?

mintymoneysaver

We have a joint account that all of our bills come out of, including food, petrol etc.We each get paid individually and then both have a standing order into the other acccount.We both earn pretty similarsalaries so put the same amount in each but you could do it pro rata.We then leave ourselves with the same amount of spending money each( we have £250), and any that's left goes into a seperate savings account which also pays off our 'family' credit card.Then we are responsible for anything we buy for ourselves e.g clothes,nights out,football , but everything for the family is a joint responsibility.It has worked for us for the past 16 years!

zeddy_2

Hi,

We basically do the same thing with one joint account where we transfer in enough money (and a tiny bit extra just in case) to that account to cover all bills and things, then the remaining money in our own accounts is our own money out of which comes petrol, phones and anything for ourselves. Basically if we do things together then my partner pays for it becuase he earns more than me, though we contribute the same amount towards bills and things. Just what works for us I guess.

Best way to work out what to transfer into the joint account is to work out your budget including anything you have to pay for over the year and dividing it by 12 (for each month) then transferring that amount in each month.

Good luck! xx

hatsepsovet

Do you think getting the low rate loan from Nationwide to clear our overdrafts and credit cards would be a good idea?

Surely 6.7% APR on the loan is better that 17% we're paying to the credit card people.