clear overdraft

chrisski

Can anyone suggest what the best way to clear my current account overdraft of £700 is?

cheers!

YorkshireBoy

1. Earn more
2. Spend less
3. Transfer it to a 0% credit card via a Super Balance Transfer
4. Move your current account to a provider that offers a 0% overdraft for an introductory period, eg Alliance & Leicester

all_hours

YorkshireBoy wrote:

1. Earn more
2. Spend less
3. Transfer it to a 0% credit card via a Super Balance Transfer
4. Move your current account to a provider that offers a 0% overdraft for an introductory period, eg Alliance & Leicester

thank you for that link. I read a thread that mentioned these but couldn't remember the exact term so I didn't know what to search for.

chrisski

thanks! dont want to change my bank as happy with service I receive from it and im not keen on getting a new card as have one already with a balance im paying off! any other ideas? loan?

YorkshireBoy

chrisski wrote:

thanks! dont want to change my bank as happy with service I receive from it and im not keen on getting a new card as have one already with a balance im paying off! any other ideas? loan?

What's the monthly cost of your overdraft? (fees & interest).

What's the overdraft EAR?

How fast are you reducing the overdraft?

==========================
I know you said you weren't "keen", but could you get another (long) 0% on purchases credit card such as the new GE Money 'Transformation' card - offering a massive 12 months introductory period? Make your purchases on this, make the minimum payments, and leave the money you would have spent in the current account to slowly (or rapidly, depending on your spend profile) reduce your overdraft. Obviously, you still have to repay the final balance after a year, but by then you'll be earning more and/or spending less - won't you?

BTW, I've suggested 2 methods (now 3 with this one) to move your debt to 0%. I can assure you that you won't get it any cheaper than that!

I don't normally do 'debt management' on these boards, but I've regularly seen posts by the 'experts' saying that loans should only be taken out after you've had your 'lightbulb' moment and addressed the reason(s) for your debt in the first place.

DopeyDora_2

Rather than transferring your overdraft debt to another form of debt, perhaps you could think about doing what I did. I had a £1500 overdraft since university days which I was always well into by pay day. I never really thought of it as anything but my money.

In November last year I had my lightbulb moment & decided enough was enough. I worked out what I could afford to shave off it each month, then on payday I would phone the bank & get them to reduce my limit by £X so that I physically could not keep spending. I did mine in £300 steps, so I paid mine off in 5 months. Obviously you could do it in smaller steps if you need to. It's a great feeling to see the limit go down, & made me realise how much money I used to spend on rubbish. I have now moved my current account to Alliance & Leicester, and was given a £650 interest free overdraft, but I haven't actually come anywhere near using it, and am earning interest on my money for the first time in a long time. Feels great!

Dora x

Aidenr

Similar to DopeyDora,
did a basic budget with the bank to see how much i could afford and my O/D now automaticly reduces £92 every month, reduced yesterday week until payday.
oh well at least i cant spend what i aint got

Annie_Fanny

Chris I don't think the penny has dropped yet. You say you are not happy to get a 0% credit card but are happy to get a loan that will invariably have a charge. This does not make sense - you can have a free loan or one that costs money??? Surely it is a no brainer? If the problem is that you don't trust yourself with the credit card then you can always ask them to reduce your credit limit - or get the card, pay off the overdraft, then cut the card up or hand it over to someone you trust so that you can't use it. You need to get money savvy!

But as Yorkshire Boy said - "What's the monthly cost of your overdraft? (fees & interest) & What's the overdraft EAR?" T~his is the bottom line. Without this it is hard to advise.

raven_3

I've got a £700 overdraft, and I'm dealing with cc's before I think about it but when I do get round to sorting it I'll probably do what DopeyDora suggests and ring the bank everytime you get paid. This way you have to stick to a smaller budget but at least it will go down every month.

Annie_Fanny

I think people have a bit of a mental block with overdrafts. The point is - is that overdrafts can have similar APRs to cc's. You have to treat it with the same vigor as your cc's. What is the APR on your overdraft Raven? Have you done the snowball calculator? http://www.whatsthecost.co.uk/snowball.aspx

chrisski

the penny has dropped thank you!!!!
i have already 4 credit cards at the mo with only 1 with a balance on it and i dont want another credit card!