should I take out a personal loan?

minist

I'm currently in a situation where my bank is changing my student account into a current account, and along with this change I'm losing my overdraft!

I'm currently £1400 overdrawn and I have until the end of the month to take this down to at most £800 od, which is the new overdraft level that I'm being offered.

As well as my overdraft I have a credit card with a balance of £1100 which I'm paying off at slightly above the minimum repayments. Currently the APR is 18% but it's about to go up to 24% for some reason I don't quite understand.

I'm currently earning ~18k a year as a supply teacher, and looking for a higher paid job. I don't have much disposable income due to high rent prices in my area, probably around £150 a month.

My thinking is to take out a loan and put my bank account into credit, and pay off the credit card debt.

Is this a sensible idea?

My partner has offered to lend me £1000, but I feel that's unfair on her, and also not quite enough to fix my problems here.

lea_t88

I am no expert but I would accept your partners offer of £1000, bring your overdraft down to £800, and with the other £400 I would reduce your credit card limit.

Just discuss an arrangement with your partner so that she knows you are not just going to take the money and not make an effort to pay her back. As long as she is comfortable with lending the money, and you are comfortable knowing you will pay her back, its better than another creditor on your back (Just the risk of your OH on your back instead- but you're a good guy right??).

But like I said, I'm not an expert on this, just what I would do in your situ.

minist

thanks for the input, i'm just worried that my outgoings would be the same as if i had a bank loan - my partner would want me paying a bit back every month too.

lea_t88

Even still, if your outgoings are going to be the same then better from your partner than from a bank. Plus you might be able to negotiate better with your partner while paying it off where a bank might TELL you what to pay, you might have an input with the missus.

You would need £2500 to get rid of overdraft and then pay credit card, so this might be quicker, but more expensive depending on loan rates, and if you think you would be accepted or not. Have you tried your bank for a loan?

minist

yeah I've been offered a guaranteed personal loan from my bank - the cooperative.

I'm not certain about the rates, but I think I'd be able to have monthly payments of little over £100 if I take it out over a long enough period.

Sublime_2

Is the loan from your partner interest free. I'm assuming it is. If so you would be able to clear more quickly.

CLAPTON

Borrowing money doesn't really fix a debt problem, it merely moves it.

Your first step is to work out a proper budget and find ways of increasing your income or decreasing your spending so there is more money available to repay the debts; a good format is this
http://www.makesenseofcards.com/soacalc.html

Given your need to reduce your overdraft so soon then it might be sensible to take your partner's offer and acccept 600 for the OD reduction; subject of course to agrreing how you will repay her.

You may consider trying to apply for a 0% BT credit card or a low live of balance to reduce the amount of interest you are paying.

theoretica

I believe you can tell your credit card that you do not accept the rate rise- but this means that you will not be able to spend any more on it- no bad thing!

skintdragon

If you were to borrow off your partner it may be an idea to set up a standing order so that you are paying back at regular intervals, and would not be tempted to spend the money in your account.

Why don't you sit down and work out what your monthly expenses are and go from there? You may be a bit strapped for cash for a few months once your overdraft is reduced but in the longrun it will make you more savvy with what you have in the bank.