advice on loan for overdraft needed please .

glynnt

Im £3900 into my overdraft and my limit is £4500
I think i pay around 17%apr in interestat the mo . I tried getting a loan of 7.5k of alliance and leicester at 7.9apr but got knocked back .

Now if i get a loan off natwest (who i bank with ) i think its at 15%apr.
I want to get back into credit with my current account so i thought a loan maybe the best option . Or do i stick it out and try and recoup some money each monh to bring it down ?

Help and advice greatly appreciated .

Thanks

Glynn

csarina

Hi,

Most people will tell you that consolidation does not work.....I know I have been there, I am almost to the limit on my CC thanks to my OH wanting to move back to Scotland just 10 months after we had moved previously.

I took the decision yesterday to cut it up, so its gone. We HAVE to manage on what we have got and clear down the CC debt. It makes me cross that my card was clear in January and its now up to £5,000.

We have no defaults ot anything and I am going to have to throw every penny I can to reduce it. As pensioners we cannot earn any more, My weakness is my garden and my hobby quilting......I am going to have to be very strong and say no to my OH when he wants something. The buck stops with me, he does not have anything to do with money at all except his spending money which pays for his bowls, having his feet done and buying bits for the garden.

I have been through our budget with a fine tooth comb, and its not going to be easy but its got to be done........one suggestion is to move your currant account to another bank and then arrange to pay a set sum per month by direct debit, into your present account to clear the o/d . If you get a basic account you can only use the money you have in the account and not rack up an o/d any more.

glynnt

is a balance transfer a good idea ?

bottleofred

Hi,
As Csarina has already said, consolidation usually works only for a short while. Initially it will feel great that the overdraft has gone, but without very stringent budgeting it's probably only going to be a matter of time before you start using it or a credit card again. Before you know it you'll owe money on them and still be paying the loan payment. If this is the case, you will eventually be unable to pay both. The best thing to do is budget carefully, bite the bullet and get rid of the overdraft gradually. You could ask the bank to reduce it by say £50 per month to assist you with this, although don't leave yourself short of money in the bank to pay direct debits as the charges will be as much if not more than the overdraft for missed payments. A balance transfer is good if you can get a 0% credit card for 12-15 months and can clear the entire balance during this time without additional interest charges. Although you must be careful not to do this and keep the overdraft facility as you'll probably end up unable to pay both at some point.

I hope you get sorted

Tixy

Hi

Do you have other debts as well as the overdraft? as you said you applied for a £7.5k loan?

Are you still using this account as your main current account? Generally if you can manage with your overdraft and can be strict enough with yourself to reduce the balance a little each month it often works out cheaper even with a slightly higher APR.
This is because interest is worked out daily and so just after your wages/income is paid in your balance is presumably a lot less than the balance at the end of the month. So rather than just compare APRs have a look at what interest you are actually being charged each month. My guess is that it won't be anything like (£3900 x 17.9%/12) £58 or so.

If your OD is gradually increasing each month (if the bal is bigger just before payday from one month to the next) then you are spending more than you have coming in and a loan will not help at all, in fact it will make things substantially worse as you will then have loan repayments to service.
If this is the case then you need to look carefully at your income & expenditure and see what changes you can make.
If you cannot see any changes then post up a statement of affairs on here - http://www.makesenseofcards.com/soacalc.html - for people to look at and make suggestions.

glynnt

thanks for all the advice guys

Im just gonna make massive cutbacks . now i know not to get a loan
and take it from there

thanks again

Glynn