Clear overdraft with new account

Birdy3_uk

Hi there.

I have a £1500 HSBC overdraft which I have been in since I was a student (I am now 23)This account is £1000 interest free and low-ish interest on £500 of it.
Plus £1300 on a Halifax credit card. Which is interest free for another 8 months.

Obviously I want to clear this debt asap. In was wandering wether anyone thought it would be good to open a new basic bank account with a different bank to pay my wawges into and my direct debits out of. While setting up a direct debit to pay off some of my overdraft each month.

Would HSBC have an issue with this? Do you think it would actually help? Or would I be better moving my overdraft with a super balance transfer thingy to a credit card.

Tixy

Hi - just wanted to bump your question up so some of the experienced ones read it.

I don't know much about this sort of thing but usually people are advised to set up a basic bank account away from their debts if they are going over their overdraft and incurring charges, or if there is any threat to take away their credit. E.g if you are reclaiming bank charges occasinally a bank may take away your overdraft.

A seperate account may help you budget better and help you make sure the o/d is going down. If you use the account its all to easy to keep going up to the limit.

Just my thoughts - hopefully someone else will be along with more experience.

Fire_Fox

Basic bank accounts should be used if the bank is grabbing all of your wages each month to pay off other debts. If you still have a partly interest free overdraft, you will probably only be allowed to keep this if you pay your salary in each month. O therwise you risk the bank withdrawing the facility.

Why don't you post up a Statement of Affairs so we can get an idea of the full situation?

justruth

I agree with firefox, you may find that there is some clause that you have to pay in a minimum amount each month to retain the overdraft at 0%. When is the 0% on the overdraft likely to end? You may do better to discipline yourself to not get up to the limit each month and deduct it down by some suitable amount in your own mind.

As FF said a SOA would be useful to get a better idea of the situation, because as it stands knowing nothing about your income etc it really doesn't look that bad.

Birdy3_uk

Thanks for the replys guys, youve kind of mirrored what I was thinking. Maybe I need to look into wether I have to pay a certain amount in to maintain the partially free od.

My 0% OD goes down by £500 every university term (Its a graduate account) So Im probably looking at a year and half before I have to pay interest on all of it.

Is there a particualr format you'd like me to post my SOA in. Is there a form on here I can attach?

Thankyou again.

Birdy3_uk

justruth

The SOA we tend to like is on http://www.makesenseofcards.com/soacalc.html

Please remember to use the MSE format.

If your 0% goes down each term then perhaps you should look at reducing the debt by the same amount? While the interest is relatively low on the remainder I would keep things as they are then in June when the 0% is gone look at BT onto a CC? It would clearly be better if you didn't need to but there is no point paying the BT fee on debt you could clear in the short term anyway.