Overdraft advice!

RayRay4

I have been lucky enough to have a student overdraft of £1250 for the last few years and due to debts from uni, I have been living out of my overdraft.

My bank has now told me that in a few months time I will be charged for my overdraft, enless I can clear it.

Despite working full-time, with a good wage, I am unable to clear my overdraft in the next few months.

What would be best to do (other than ideally try to clear it!), to avoid being charged each month. Open a new account with an overdraft and transer money to clear my student account? Get a credit card to cover the cost? Or are there any other possible ways to try and clear my debt in the cheapest way?

Thank you

Innocent_Guy

Would you consider getting a 12 month personal loan? This means that you can clear you overdraft and pay it back in monthly instalments? Remember if you do choose this option make sure you do not go overdrawn again!

Lokolo

I don't get what you mean by opening a new account else where and using that overdraft, as that overdraft will also have charges on it?

tripled

Lokolo wrote: »

I don't get what you mean by opening a new account else where and using that overdraft, as that overdraft will also have charges on it?

Don't some providers give you 12 months free?

I'd say to pay it down as much as possible, then nearer the time your interest free period ends, ideally transfer to another account with an interest free overdraft period or a credit card which will let you BT to a current account, again with an interest free period. Either way you need to make sure you are disciplined and clear the balance, as if you're finding it hard on interest free it will be even harder when you are paying interest on top.

scottishblondie

Pretty much any method of totally clearing the OD is going to result in interest charges anyway, possibly at a higher rate than the current bank would charge you. A credit card definitely isn't a good idea IMO. You could try to get an OD with an introductory offer, for example Alliance and Leicester claim to offer OD matching at 0% for 12 months, but there is no guarantee that you will get enough to cover the £1250 (many people don't get their OD matched) and eventually you will have to pay interest charges anyway.

What interest rate/charges would be applied if you didn't clear the OD?

RayRay4

Thank you for your replies.

If opening another account, I would ideally need either an interest free overdraft (I know A&L offer one at the mo) or one with a smaller charge than what I will be paying if I stay.

If I stay it's a pound a day for each day overdrawn, so would probably end up paying £30 a month.

I wasn't keen on the credit card idea, but hadn't considered a loan. Does anyone know whcih banks offer the lowest rate of interest on a loan of about £1250?

Not an ideal situation I know and I don't use all of the overdraft each month, but due to recently moving house am in it quite a bit at the moment.

Lokolo

Ah you are with Halifax.

Not many banks will give you a loan tbh. You are young I assume. Not sure about the rates either, but I can't imagine them being friendly.

You could always try Zopa but I don't imagine these rates are particularity good idea.

rb10

You could open a credit card with a long interest-free period on purchases (e.g. 12-months here). Then, put all your normal purchases on there. That way, just make the minimum repayments on the credit card, and focus your efforts on paying off your overdraft first of all.

slummymummyof3

Why don't you post a soa so we can look at saving you money on your normal monthly outgoings so that you can start to pay off extra towards the OD. I suggest you start a spending diary to see where all your money actually goes as you would be suprised how nipping in to costa coffee actually adds up!