Paying off an overdraft

KateEgg

My student overdraft has been ignored for far too long so I went into my bank to discuss the best way to pay it off. I suggested that I would liek to pay off £150 every month until it was closed by either calling up or coming into branch on or around payday to say 'please close my overdraft my £150'. I was informed that if I do this it is they perform the same credit checks as if I was applying for an over draft every month and obviously this affects my credit score. I was told the best way would be to either take a loan or save up the money to pay it off. I think this is really bad because it means that you either have to be super disciplined and save up to pay it off (which I am not) or take out a loan, the loan I was offered was at 26% ineterest! has anyone else experienced this? What are people's views?

wigglykoala

The exact same thing is happening to me! I'm lost, i dont know what to do. I just want to get out of debt and start having a life!

Fortheloveofmoney

If it was me I'd just pay in the extra £150 per month or by just spending £150 less. I wouldn't take out a loan unless the overall interest was less which at 26% it's unlikely to be!

andymc29

sometimes the obvious answer is the best one.

In this case, you have an overdraft, let's assume it's low interest.

You just need to pay it off by a small amount each month, if you can afford to make loan payments to pay it off then you can afford to draw out teh same money every month, stuff it under your bed, then after you've saved enough, take that money into the bank and pay it all in to clear your overdraft.

Really it just looks like your biggest obstacle is your own willpower to save, not the options the bank's giving you.;)

Sharon87

I have another account that I use as well as my overdraft. I get my wages paid into the overdraft account, then transfer the money I need that month into my other account, and leave whatever I can afford to pay off in the overdraft account. I did used to put it into a savings account, when it was 0% but this month it's going to start charging me interest, so this is the plan.

I find it works, just don't take your debit card for your current account out with you.

Angela84

I was told this as well by Natwest, really annoying as I knew I wasn't disciplined enough to just leave the money there. I knew that £-1600 to me meant zero, and £-1500 meant £100!

When I am ready to start paying both mine off in the next couple of months, I shall open up a new account with no overdraft, and start transferring money to the other 2, cut up the cards, and just keep my internet banking to watch it go down. I'm scared after all these years of seeing it as 'my' money I'll find it difficult paying into the account and just leaving it there, but to be debt free would be an amazing feeling.

Better than chipping away at your credit rating when you're only trying to help it!

Good luck.

josephine82

Definitely, open another account, transfer all your bills/payments over and then set up a standing order for £150 directly after payday every month to the old account. Then as someone said above, don't take the card for the current account out with you, hide it under the bed, or cut it up and then you won't be tempted to spend anything from that account.
You can then set yourself up a budget with the new account and you should be able to pay off the overdraft pretty promptly!

Sharon87

One thing to note is though if you stop payments going into your overdraft it may be closed - lots of people on here have had that problem. Which is why I suggested still get your wages going into the overdraft, but just transfer the money minus the £150 out into your other account.

Angela84

Yes, I've had that, I didn't do anything with my RBS for a while and had a call from them saying they'd have to transfer it into a loan if I didn't 'reactivate' it.
I had a really nice bloke basically say as long as you even put a fiver in there and take it out the next day, every 6 months Ill be safe.

Just set up a standing order on payday, and don't cancel it until its paid off!