Clearing a small overdraft

bosb

Hi guys, first post.

Right now I am overdrawn about £700, on which I get charged about 19% (Nationwide).

I will be able to clear it and stay out of overdraft when I get paid at the end of this month on the 28th.

Is it worth it to clear this temporarily then pay it back with some sort of 0% offer? Or some way I can pay less than 19% on it?

Thanks!

snowqueen555

How long has it been overdrawn for?

Tixy

Hi bosb and welcome

Great that you can clear it and stay out of it after the end of this month. If you stick with the overdraft (assuming it won't increase anymore during the month) then you'll be charged around £11 for the overdraft for the month.

I cannot think of any way you could keep this debt cheaper for a month (assuming you don't have any savings). If you were thinking of a 0% credit card that allows super balance transfers (to your bank account) - most of these charge a fixed fee of around 4% which would obviously cost you more. Assuming you hadn't already got a 0% card then it would take over a week before you could set it up and do the transfer anyway.

bosb

Thanks guys. Wasn't aware of the fees on super balance transfer cards. I thought sticking with it would be the best option but on the off chance I could save a few quid, I was just wondering.

foxgloves

Partner & I were both in big overdraft for ages and I have to say that getting rid of these was really the start of our road to becoming debt-free. Suddenly it all just became much easier to budget each month because when our wages went into the bank, all that money was ours, we were no longer spending somebody else's. We then started properly budgeting (me), spending less (both of us, but particularly him!) and this meant all spare money could be thrown at credit cards & a loan. Am a huge supporter of getting rid of overdrafts because of this! Good luck.

dreamdreamer

I was the same foxgloves - suddenly it all made sense when I budgeted once the overdraft was gone. Wish I'd paid it off first!

foxgloves

Dreamdreamer, I agree with you. I know we had debts with bigger interest rates than those on our overdrafts so I'm sure lots of people would have gone at it from a different angle and paid those off first, but I just couldn't get my attempted budgets to work properly because I never really had a feel for how much of the money was ours & the constant minus numbers were demotivating. As soon as we'd got rid of the overdrafts, like you say, it all suddenly clicked and apart from one month when partner was not paid an amount of money he was expecting, we haven't gone into overdraft again so far.

Flyboy152

There is no such thing as true 0% offers, they almost all come with a fee. But they are often less expensive than overdrafts. However, if you can pay it all off at the end of this month and not need to go into overdraft again, there would be little point in creating a substitute debt.

Blonde_Ambition

What about the 0% on purchase for X months credit cards? You could buy your shopping, petrol, essentials on the credit card and therefore leave the money in your account paying off the OD. You'd have to keep an eye on the balance though and make sure you only buy essentials, not see it as additional income. You'd have to be disciplined!

Flyboy152

Blonde_Ambition wrote: »

What about the 0% on purchase for X months credit cards? You could buy your shopping, petrol, essentials on the credit card and therefore leave the money in your account paying off the OD. You'd have to keep an eye on the balance though and make sure you only buy essentials, not see it as additional income. You'd have to be disciplined!

That sounds a better plan than paying a transfer fee. But the OP will have to be very careful to pay down the balance before the interest free period finishes.