Taking small loan to pay off overdraft?????

sammydee

Hi,

I need a little advice. I have recently switched bank accounts from the natwest to Halifax. Having graduated from uni a few years back i was constantly within an overdraft.

Now I realise i am actually quite good with money, and each month I have been paying money (£100)into the natwest account to pay off the overdraft.

Currently, there is £1430 outstandng, and at the moment each month the interest is around £23-25.

I want to know if it would be a benefit for me to take a small loan for one year to pay this off, will it cost me more or less in the longrun? I received a quote for one at 16.9% fixed, but I am not going to lie, that doesn't mean much to me. I am a homeowener, with no other loans or debts.

It just seems like each month I am being charged a hefty amount and not making any steps to really reduce the overdraft.

Any answers and advice are greatly appreciated.

Thanks!

CLAPTON

to repay a loan of 1,430 at 16.9% over 12 months would require monthly payments of £130 with total interest of 125


if you can only pay 100 per month then it will take about 16 months and with total interest of 170

as I understand it Halifax don't actually charge interest; instead they charge a daily fee which works out very expensive

when you switched banks why didn't you get a free OD for the first year?

YorkshireBoy

The quote for 16.9% APR says your credit rating isn't the best!

This could be down to no other cards/loans etc, but should be offset somewhat with the mortgage (depending on how long you've had it...if indeed you have one?).

Then again there could be something lurking on your credit report. Maybe take a look and see?

If everything is in order I'd go for an MBNA card and use their 'money transfer' feature. This will get you around 23 months 0% interest (you won't need that long at £100/month) for a one-off 4% fee, so just over £57.

Whatever you do, do not fire off loads of applications as that will damage your credit rating.

sammydee

Thanks,

Well it was June when I switched, they weren't doing the overdraft offer then, although I have seen it is something they are offering with the current switch offer.

Thanks for your help:)

sammydee

Thanks Yorkshire Boy.

How can I get a look at my credit report? Your advice is really helpful

:-)

DCFC79

sammydee wrote: »

Thanks Yorkshire Boy.

How can I get a look at my credit report? Your advice is really helpful

:-)

You apply for it at each of the 3 credit ref agencies.

Maybe read this.

BugsyBrowne

YorkshireBoy wrote: »

The quote for 16.9% APR says your credit rating isn't the best!

This could be down to no other cards/loans etc, but should be offset somewhat with the mortgage (depending on how long you've had it...if indeed you have one?).

Then again there could be something lurking on your credit report. Maybe take a look and see?

If everything is in order I'd go for an MBNA card and use their 'money transfer' feature. This will get you around 23 months 0% interest (you won't need that long at £100/month) for a one-off 4% fee, so just over £57.

Whatever you do, do not fire off loads of applications as that will damage your credit rating.

Think you'll find 16.9% APR for a small loan of £1500 is very competitive and wouldn't say the OP has any credit issues to be offered this APR.

pheonixrising21

BugsyBrowne wrote: »

Think you'll find 16.9% APR for a small loan of £1500 is very competitive and wouldn't say the OP has any credit issues to be offered this APR.

I agree. The low rates you see advertised are usually for much larger loans (over £5k, or even £7.5k). Loans as small as £1,500 are often charged at APRs closer to credit cards rates.

The 0% money transfer CC idea is a good one though!