Please help, at breaking point and lost!

zootsit81

Hi There

I desperately need some advice. I lost my job about 18 months ago and have been temping on a very low wage, which has meant ive had to live partly off my overdraft.

I have just got a new permanent job (phew!) on much better money. I am now determined to clear my debts once and for all but am not sure what is the best way. Heres a breakdown of my Debt

Barclays Overdraft £1800 @ 14.9 % APR
RBS Over Draft £2000 @ 19.9% APR
RBS Credit Card £1300 WAS 0% for 12 months, has just ended so now 15%

total £5100

I have budgeted and calculated afford to pay back £250 a month.

My question is should i consolidate this into a single overdraft or loan. I know the general consensus on this matter is no, but I have had these overdrafts since I graduated 5 years ago and never seem to clear them , at least then I would have a clear payment plan. Just looking at my interest on my rbs overdraft is £26 per month, that means i have paid over £300 in interest just on that account in the last year!

I also have a joint savings account for bills with my house mates at Lloyds TSB that is at least £500 in credit, so i presume they see me as a good customer.

I have a meeting with lloyds in a few days, I am wondering whether I should ask them to open me a personal current account at a better rate than rbs or barclays and transfer all the debt, or even to take a loan with them (as i suspect that's what they'll suggest) to consolidate the debt

Neither RBS or barlcays will extend my overdraft as I have been graduated so long they want me to pay the debt off

In the recent past Lloyds have sent me offers of low rate credit cards so i presume they think I have good credit, although recently i have exceed my other overdraft limits at rbs and Barclays.

What should i do? I am determined to rid myself of this debt now I am earning more but should i just attack it as it is, or try and reorganise it to something more manageable. Having more than one account feels very stressful and out of control

Please help!

thanks

Peter

mum2one

I wouldn't really go for the consolidation, only because its too tempting to respend. The other thing that may go against you, is the fact that you haven't been in the job for long.

May be worth doing a statement of affairs and see if theres anything that can be squeezed down on, etc

Also consider looking at the snowball, there be a link on the top, (haven't got it sorry), but you put in the amount you want to pay per month, outstanding balances, apr and mimimum repayment eg credit cards might be 3% or £5. It gives you the option of highest balance first (takes longer) or the highest apr 1st, its an absolute god send, got my repayment schedule for the next 4 yrs set up on mine xx

zootsit81

thanks! I didnt think of the snowball ill have a look now and post results

RAS

The RBS OD appears to be the account to pay off first as the APR is highest.

zootsit81

OK Ive used a snowball calculator and it lets me pay it off in 2 years at an interest cost of £700. Although it doesnt take into account charges fro exceeding the overdraft limit. As the lower interest one at Barclays is bottom of the pile with a £5 monthly payment its constantly over it limit in the plan until the others are paid off.

This is the problem , I'm juggling two overdrafts and have to keep paying into both to avoid going over the limits on either!

zootsit81

actually , just realised I could have my wage paid into one and throw money at the other so nether would be on the brink of exceeding the limit. Would have to cut up the card for the one i'm not using though!

MFWannabe

Hi
First thing i would do is open a new bank account with a bank who is not linked to who you have debts with; so then they can't just take your money to offset against the debts. Then have your wages paid into this new account; do not get any overdraft with your new account.
Do you think you'd be able to get another 0% card to move some of this debt to? If you can get an MBNA 0% card then you would also be able to do a super balance transfer to pay off some of the overdraft. If you can manage to get one of these cards then at least you won't be gaining interest while you're trying to pay off the debts
Also consider posting an soa on here so we can advise where you can make some cutbacks to pay these debts off quicker

zootsit81

Thanks Freez

Surely i would be better getting my wage paid into one over the overdraft accounts? I understand banks are able to take money to pay off existing debts but my monthly salary is £1250 so it wont take me out the red anyway. This way at least my money is reducing the overdraft amount for a portion of the month, hence reducing the interest

I will definitely look at getting a better credit card to swap the existing one to . Maybe i should ask lloyds for one (where i have my in credit bills account), they sent me an offer a while ago for one at 4% for 12 months. that's a lot better then what ive got now.

ill post an soa when i have time, I've cut back on as much as i can, but any suggestion would be welcome

cheers

sofababe

If banks don't think u are managing your account to their satisfaction they can withdraw your overdraft, or reduce it. If they did this the day after payday u'd be f***ed. I've read of this happening although I think the bank is supposed to give notice. Be careful, the bank is not your friend while u are in the red!!

MFWannabe

As soafababe says: the banks are not your friend; all they are interested in is how much money you can make them.
I believe LLoyds are linked to RBS; someones else on here may be able to confirm this.
You really need to think about getting a seperate bank account; seperate from where you have debts; then treat the overdrafts as debts; at the moment your wages are going into the account and being swallowed by your overdraft; so then you spend the rest of the month living on your overdraft!