re-paying overdraft

rickslick

hi, can anyone help me? i have a £3000 overdraft and im currently paying about £40 a month for having the overdraft. i want to open a new bank account and have the overdraft as a debt that i can pay off each month. so basically if i was to pay back £40 quid a month, it would actually be taken off the debt each month, rather than actually staying the same. cos otherwise, i dont know how else im ever going to be free from this debt. can anyone help me with the right steps to take, from choosing a new account to settling the outstanding debt?? thankyou

Tixy

What is the £40 made up of? interest or daily charges or account charges?

It can be a good idea to move to a new bank account but you will still need existing bank to agree to freeze the interest or charges on the overdraft. They might agree to this if they can see/believe that £40 is all you can afford to pay to this debt each month. But if they do agree to freeze costs this will usually only be if they officially recall the overdraft and then is likely to lead to a default being put on your credit file, which wil affect your credit file for 6years.

With regards to choosing another account - what bank are you with currently? do you have other debts, if so with whom? are you struggling to pay off any other debts you have? What is your credit history like?

timbo58

if your credit is ok it might be worth getting a 0% credit card and doing a super balance transfer which allows your OD to go onto the card at 0%.
You do have to be disciplined to do this and ensure you pay the whole CC balance off and not use it for more spending however.

rdchick

What I am doing with my 3000 overdraft is using a savings account and then transfer the money over as my charges are ridiculous but I can cut them in half when it gets to 2500 xxx

rickslick

hi, thanks for the feedback. currently my credit rating is not good and would not be able to get a credit card or loan to pay it off (transfer). one thing i dont understand though is i thought you would have to have good credit to get an overdraft in the first place. when i first got the overdraft, although i was working, my credit rating was zero. should they of given me an overdraft?? admittedly i was young and didnt ask too many questions. any other ideas for someone with bad credit rating??

Tixy

Well it used to be a lot easier to get credit then it is now - most banks start you off with very low overdrafts now to see if you handle them.

Your own bank can also see regular payments going into an account for wages and knows they can recall the overdraft on demand if they wish - ie after payday if they thought a person was struggling.