Trying to ditch the overdraft!-question about Martins advice

PrincessJR

Hi Guys,

My Husband and i currently have a £1000 overdraft on our joint account with Abbey (Santander) which we 'live' in i.e. we use it every month up to the limit. (jointly we earn roughly £3000 a month and our outgoings are roughly this so unavoidale now we have it) :-(

We are trying to be more money savvy, and today took out a 0% balance transfer and 0% on purchases Credit card which offers 9 months on each (with Halifax).

I have just read Martins article on Best bank Accounts, and it mentions that if you constantly end up in your overdraft a good idea is to leave as much of your wages in the account as possible, and use the 0% credit card to make purchases/payments, thus leaving your salary to pay of the overdraft. Obviously the credit card would then need t be paid off with the 9 months for it to be worth doing.

has anyone ever done this? Is it realistically do'able?

Thanks

Oneday77

If your living in the OD, personally I would look at your expenditure first.
Post an SoA from www.makesenseofcards.co.uk/soacalc.html
£3000 a month is a lot to disappear and not leave anything, you might want to start a spending diary.

PrincessJR

I know it seems a lot, but our mortgage is £1000 per month alone!
Once our other bills (utilities,council tax, car payments etc) have came out you would be suprised! It doesnt go that far.

I have a monthly expenditure checklist which we use each month., and wherever possible, once a year, I switch providers to get the best deal so there are no other areas in which we can make cuts - believe me ive tried! Things are slowly getting better but the overdraft is a pain (£25 per month!!!)

Poosmate

Could you open up another current account and transfer all your direct debits/standing orders to it and then transfer enough money into it each month to cover all of these (plus a few extra quid) from the original current account?

I think by doing this, you know all your house stuff is definitely going to be paid and what's left in your original account is what you use for your other spends. It's here that you'll be able to make more savings, i.e. reducing your grocery spends or keep a spending diary. Having seperate personal and household accounts just simplifies things I think. It works for me.

Hope that helps

Poo

bluebag

Whatever you do try and get rid of the overdraft, make a firm commitment to reduce it by say £50-70 a month, at least that way you are getting somewhere into positve territory.
In the last awful recession the bank just stopped my overdraft dead and demanded repayment straight away! I was hairless! I've never had one again, I don't want it. I was unaware they could demand full immediate payment like that, but they can, and believe me they do!

Billy-no-Money

What bluebag said - banks have a habit of calling in overdrafts at short notice.

I had a 'sticky' overdraft of £400 - in the end I aimed to pay some off each month and then get the limit reduced by the same amount to stop me using it again.
It will take a while to clear an overdraft this way, but regularly reducing the limit at least shows willing and might make the bank less likely to demand full repayment.

Without reducing the limit I found I was just spending it again.

Of course, you have to be careful not to go over the new limit!