£9000 + Overdraft

Sookie65

I am ashamed to admit that I have such a huge overdraft, and that I have had it for quite a number of years. With the help/advice from this forum I have managed to pay off 3 credit cards and a car loan (over the past 3 years). I have one 0% interest card which I am paying off gradually and that I do not ever use, which has £3000 on it now (it was £5000). I "piggy bank" all my accounts, and have just had a "drains up" on my finances to make sure I am sticking to my budget (which I am).

I really need advice on the overdraft please. I am with Santander and they only charge me £10 a month for the OD, but I never seem to be paying it off. My salary goes in every month, the bills are paid, and there sits my overdraft, staring at me!!! It is like an albatross around my neck. Any suggestions on how to start paying it off would be greatly appreciated. Thank you.:o

Kei

The overdraft, for me, was the hardest part to pay off. Simply because all your other debts are seperate, but the OD just gets mixed in and like you find, it never seems to be going down.

My advice is to open a new current account with a different bank and transfer your salary and bills over to the new account. Then set up a S/O or dedicate a certain amount each month to go to your old Santander account to pay this off. Treat it like a separate debt. Just make sure that you dont have an OD facility on your new account so that you end up with 2 ODs!

It will also make you feel a lot better when you look at your account and see a positive balance, and it should help you budget better.

Sookie65

Thank you Kei. I am worried about doing this though, If I take away the "guaranteed" money going into the Santander account can't they just insist I pay the OD off immediately? Sorry to ask, but I am not sure how it all works with regards to this.

Kei

Good question - i dont know perhaps you need to check the T&C of the account. I know what you mean - because you are getting a deal where you are only being charged £10 a month for the OD, is this subject to paying in a certain amount each month?

Probably best to check the T&C that you got when you opened the account, or you might find them on their website. You don't want any nasty surprises!

GAH

OP, How much can you afford to pay towards your overdraft each month?

IF for EG you can pay £200, then contact Santander each month and reduce the limit by that amount each month, so then your limit starts reducing.

Sookie65

Yes, I will do. Thanks again.

Sookie65

GAH, that is a good idea, and one that hadn't even occurred to me. Thank you .

katydo12

Hi, I have the same problem with an overdraft on a previous account with HSBC, I opened a new account with Halifax and stupidly got an overdraft with it. Now I have had a letter from Hsbc because I havent paid into the account for around 3 months! There isnt much to pay off but obviously it needs paying. I feel like if I didnt have an overdraft life would be easier but I always seem to be in it so don't know what I'd do without it! Vicious circle!!

mrsb83_2

I would be very wary about stopping £ going into an account with a 9k overdraft. I would be concerned they'd recall it.

If it's only costing you £10 a month, I'd start saving a sum in a separate account to pay against the overdraft. I recently did this and am about to pay my overdraft off this month. Every time I saved £500 I transferred it to my current account.

You need a disciplined budget for this to work though, because spending the money you've paid off is a real concern. Although this isn't what I did, I think you should be looking at reducing the overdraft every month too if possible.

Sookie65

Katydo12: This is what I am afraid of to be honest! mrsb83: that again is very good advice, and is something I am more likely to stick to, I could open an ISA I suppose and use it for the OD payment at the end of the year? Thanks again for all the help everyone :-)