overdraft help??

motto2

Hi there sorry but i dont know if i'm posting in the correct section, I have an overdraft on an old bank account which is at its limit of £5,000 which costs me £80 per month in interest charges, I am looking to pay off this overdraft but dont have much spare cash at the moment.
I was wondering if any you guys had any ideas to help get this down I was thinking of asking the bank for a loan to pay it off that way i pay back a loan amount each month but at least the balance comes down as paying interest each month on the overdraft still leaves me with a £5,000 balance after 3years hence why i know want to pay this off, unsure if i would get a loan from the bank though as my credit history is not the best, no ccjs just a couple of missed payments and my outgoings are quite high.

the other option i thought of was to write to the bank and ask for a payment plan to pay off the overdraft & close the account without incurring such high interest each month, has anyone ever heard of this before?

any suggestions or help would be appreciated.

thanks

bottleofred

Hi Motto2,

You could approach the bank and ask if they would be prepared to freeze the interest in order to give you a chance to pay it off. The fact it is an old account may also help. The loan option perhaps is not a bad idea as it would probably be cheaper, but borrowing money to pay off/consolidate debt does not always work in the long run and your credit rating may not allow for this. Perhaps you could post your statement of affairs and you'll get loads of help/advice on how to save money. If all else fails and the bank allow you to go for the 3rd option, do try to get the interest frozen or at the very least reduced.

DarkConvict

The odd missed payment won't hamper the credit file, its defaults and CCJs that do the most damage.
The main issue for someone in your case is the spare cash argument. if you earn £8,000 a year, and have a £5,000 debt showing on your credit file, you would be considered risky to lend to as you are obviously maintaining a debt already.

http://www.whatsthecost.com/snowball.aspx
An example loan could be £5,000 @ 8.9%, paying back £100 a month.

It will take you 63 months to pay off these debts if you snowball correctly. During that time, you'll pay £1,216.00 in interest.

That is over 5 years to repay!

Remember if you get a loan you are paying on there terms not your own. It may well you cant afford a payment this is something u can get away with on a overdraft not a loan.

Consolidation works in only a very small percentage of cases, your best bet is really to reduce outgoings and increase your income! There are lot of suggustings on this forum for help and its best to start filling out an SOA in MSE format - http://www.makesenseofcards.com/soacalc.html

motto2

thanks guys for the replies, I always pay my overdraft interest each month I have never missed this and dont want to but I just want the balance to start coming downm was thinking of paying £120 per month to the bank but that is only £40 per month coming off the balance which is why i was trying to see about alternatives, think i will try writing to the bank with this offer of paying £120 per month if the interest can be reduced on the existing overdraft this way we can reduce the outstanding balance.

DarkConvict

At £80 a month on £5000 is about 20% apr.

But it does allow you to make overpayments.
Some of if consolidation is any good is down to what you can neogiate and what loans are available.