Stuck in Overdraft, need advice!!

hoop84

Hi

My names Ryan, I am a freelance video director. I have spent the last 6 years being battered by my bank with regards to overdraft fees and credit cards. I have recently managed to re-pay my credit card by going on a credit card management scheme, although it took my two years to pay off. I would like to get my debt down and currently owe £1,900 on my £2k overdraft. I am paying interest and charges on this, as well as a £10 fee per month. As you can probably gather i'm very under-educated when it comes to money matters, it hasn't been a major issue purely because I was earning so little the banks couldn't take that much off me. This is the first year in which I have made even remotely a decent wage (for the first time in 5 years I have to pay tax) and I would like to pay off what i owe and try and get out of debt. I have a fair credit rating (nearly good), earn working tax credits and have a very volatile income.

thank you for reading, any advice whatsoever would be very much appreciated.

[Deleted User]

The best way to get rid of an overdraft is to open another account where your wages/income does in to and view the origional account (the oe with the od) as you would any other debt. Make a payment towards it every month and once the payment has cleared, reduce the o/d by this amount every month until gone.

before doing this however you probably need to check the terms and conditions of the overdraft - some banks insist that that you use this as your main account (have income paid in and DD's going out)/ You can get around this by continuing to have your income paid in to this account, and then forwarding t to your new account the day after pay day - but ensuring you leave enough in the account to cover the DD's on the account and the amount you want to reduce the OD by.

Alternatively, set up a regular savings account and save a set amount every month until you have the full amount to pay off the OD and pay it off all in one go and then ask for it to be cancelled.

Depends really which method suits you. But remember that the bank can recall the overdraft whenever they like.

Posting a Statement of Affairs might be a good place to start - detailing all your income and expenditure and debt, minimum payment towards debt and the interest being charged on the debt to identify how much you can realistically reduce it by month to month (as a freelancer I am assuming this might be more difficult than as an employee as I assume that your income varies - but none the less still worthwhile doing) It will also help identify any areas where savings ca be made in your expenditure allowing you to pay more towards the OD.

here's the link: http://www.makesenseofcards.com/soacalc.html

_Persephone

Hi, I agree with what Domino as has said - I am in the process of doing this myself, I have recently changed my main bank.

However, be careful. My plan was to reduce the overdraft each month to avoid spending the money again, and I did this month, but I have since discovered that they do a new credit search each time you reduce it. So it is best to pay it all back and then reduce it in one go.

chrisfreelander54

How did u find out about the regular credit check?

_Persephone

chrisfreelander54 wrote: »

How did u find out about the regular credit check?

I guess you mean me

I called the bank and asked them.