Sounds ridiculous but - do you consider overdraft as "debt"

DVardysShadow

KPR11 wrote: »

... I made a decision to open a new account (with Barclays) so that I could start paying off the "debt". My salary is paid to Barclays account and I transfer about £500 to the Natwest account to minimise the interest cost. I can only afford to reduce it by about £50 pm so towards the middle to the end of the month (when I have used up all the money from my Barclays account) I start using the OD again. By the end of this month I will have paid off c£150. How likely are they to recall the OD? If they do then I will be screwed

It is a subterfuge on your part and you might get away with it. But you do risk NatWest clearing out your account and leaving you £450 down. Looking at your sig, you are obviously clearing other debts too - to me it looks to be a wise move to hold off on paying more than minimums on other debt until you have this overdraft sorted - unless you could rectify NatWest leaving you £450 down out by not paying down other debt for a while. The overdraft is a wild card that could easily get you into defaults - if you are paying everything on time, it would be a shame to let the overdraft mess up your credit record.

KPR11

DVardysShadow wrote: »

It is a subterfuge on your part and you might get away with it.

I know I have been naughty

DVardysShadow wrote: »

But you do risk NatWest clearing out your account and leaving you £450 down.

It has always been at the back of my mind and as a result I have been transferring the money by cheque (not really sure if it does make a difference or not tbh) :think:

I recently got a credit card with a £2k limit which I don't use so I guess if push came to shove then I could use it if NW did decide to clear my account but I would rather not - if it makes sense?

On the bright side, I am moving out of my current place and moving back home for a couple of months (maybe a bit longer if things work out) so I intend to use the deposit that I will get back to pay down the OD.

DVardysShadow wrote: »

to me it looks to be a wise move to hold off on paying more than minimums on other debt until you have this overdraft sorted - unless you could rectify NatWest leaving you £450 down out by not paying down other debt for a while.

The OD has the worst APR (the others are at c5%) so I thought it made more sense to chuck every remaining penny I have towards it

DVardysShadow wrote: »

The overdraft is a wild card that could easily get you into defaults - if you are paying everything on time, it would be a shame to let the overdraft mess up your credit record.

I am guessing that I would be given at least say a month or 28 days to sort things out right?

Thanks for your help, much appreciated!!

DVardysShadow

If the credit card has a lower APR than the OD and you can pay the minimums, it may be better to use it to clear the OD - not necessarily via a cash transaction, but by substitution of spending - you put your £500 towards the OD, and when you would have gone back to the OD to see out the month, go to the CC.

I am slightly confused by what you say - do you only pay off minimums on everything with just £50 left to pay off the OD? If so your DF date is looking optimistic?

DarkConvict

Overdraft is credit, your using money that you do not have.

Overdraft is clearly a debt.
Only difference i see between an authorised overdraft and a credit card is that you can put your bank account into credit, rather than a credit card just been fully paid at the end of the month.

Living in your overdraft shows you have a debt issue, even if month after month the amount you use doesn't change, it shows you have overspent at some point.

p.s. Overdrafts are repayable on demand given 30 days notice. Living in it is a bad idea as it can be revoked at any point!

KPR11

DVardysShadow wrote: »

If the credit card has a lower APR than the OD and you can pay the minimums, it may be better to use it to clear the OD - not necessarily via a cash transaction, but by substitution of spending - you put your £500 towards the OD, and when you would have gone back to the OD to see out the month, go to the CC.

That is what will be happening from this month onwards but I am initially going to do a 50-50 split.

DVardysShadow wrote: »

I am slightly confused by what you say - do you only pay off minimums on everything with just £50 left to pay off the OD? If so your DF date is looking optimistic?

I have 3 debts (inc the OD)

Loan 1 has got a balance of £3,500 with minimum payment of £350 pm (so should repay it by the end of this year).

Loan 2 has got a balance of £4,000 with minimum payment of £50 (I intend to start paying an extra £350pm after L1 finishes, so should finish repaying it by the end of next year latest).

Finally I have the OD of £1,000 (I have imposed a minimum payment of £50pm excluding interest on myself. However, I have been paying off a bit more c£75pm. If I continue paying between £50 and £75, the OD should clear between 12 to 20 months. it will clear within the next 3 months because I have already paid off £150, my deposit refund of £450 is due and the time that I will be at home I will not be paying rent or bills, just an increased transport bill).

If I can continue keeping my spend to a minimum like this month then there is no reason why I should be DF by End of June 2011. Just thought I would give myself a bit of slack just in case!!!

DarkConvict

KPR11, check that Loan 2 doesn't have early repayment fees, if it does work out if its worth while paying it off early.

KPR11

DarkConvict wrote: »

KPR11, check that Loan 2 doesn't have early repayment fees, if it does work out if its worth while paying it off early.

Thanks DC

Loan is from family so no early repayment fees. And also the reason why it's a small repayment amount of just £50pm on a loan of £4k at a very low apr (4%) - just compensating for lost interest on savings

roxiepie_2

interesting thread!

Have to say, i consider an OD to be a debt. It's not something that sits well with me.

I'm currently paying my old student one back, having being sat in £1500 of it for about 4 years! Hoping by next payday I can write to them to cancel it entirely.

Have a question I hope someone will be able to answer - I have not been a student for a number of years, but have still been receiving the 0% interest given to students. When I write to them to close the overdraft facility, is it possible that they will notice this and demand ALL the backdated interest???

Am really worried about this, any advise would be great

brokeinwales

roxiepie wrote: »

interesting thread!

Have to say, i consider an OD to be a debt. It's not something that sits well with me.

I'm currently paying my old student one back, having being sat in £1500 of it for about 4 years! Hoping by next payday I can write to them to cancel it entirely.

Have a question I hope someone will be able to answer - I have not been a student for a number of years, but have still been receiving the 0% interest given to students. When I write to them to close the overdraft facility, is it possible that they will notice this and demand ALL the backdated interest???

Am really worried about this, any advise would be great

Similar happened to me, I still had a 0% OD for two years after I graduated (are you with RBS by any chance?) - I think because they didn't actually record the date I expected to finish my degree when I opened the account, they just left it on for the longest likely time. Eventually they did start wacking enourmous charges on it without warning (one more reason to check your statements regularly!).

I'm not an expert, so I don't know if they can charge you for backdated interest (though it would surprise me), maybe someone else vcan help with that, but you don't really need to close the overdraft facility. Just pay it off and then don't use it again.

Someone told me recently that it's actually a really bad idea to ask the bank for changes to your OD limit too regularly, even if it's to reduce it, because you get credit checked everytime, so it will adversely affect your chances of getting credit in the future (which means people who phone up to ask for a reduction of £50 every month aren't really doing themselves any favours). Better to just pay it off and not go back into it.

roxiepie_2

just bumping this up!