I dont want to be always_ovedrawn forever!

always_overdrawn

I have thought of a way of paying off my overdraft, but i never see it in any "how to pay off your overdraft" guides.

Please let me know if you see a hole in my plan of if you just think its a bad idea.

I hope I will need to change my username in about 12 months.

Plan: I have a £2000 overdraft with Natwest. I was considering opening a basic account with for example the co-op and having my wages paid into this new account then once i have set this up i plan to transfer £150 a month from my my new co-op account into my natwest overdraft and watch it dissapear. I will ask the bank to deissable my overdraft as i go, maybe at every £250 mark so i wont be tempted to dip into it.

I have considered that the overdraft interest will make the process slower, however this will reduce (and thus the paying off process will speed up) as the overdraft gets smaller. It isnt a massively high interest rate as its an overdraft that I have had since being a student..student/graduate overdraft are generally cheaper... Is this a sensible plan? I would really appreciate feedback.

always_overdrawn

oh and I also hope to make several random lump some payments as and when i can

[Deleted User]

If you stop having your wages paid into the account, the bank may withdraw the overdraft.

What's wrong with continuing to have the wages paid into the account and, every month, leaving £150 of the salary in the account?

Ilona

Just stop dipping into it. It isn't your money, it's the banks money. Pay the overdraft off as quick as you can, throwing every penny at it, then tell them you don't want or need their money.
Ilona

lululoveslondon

I am doing the method you suggested and it's helped me loads! Almost finished paying mine off now. I went to Natwest and asked if they could set me up a secondary current account for this purpose and they were happy to do it

Tixy

The method you describe is sometimes recommended on here for people who struggle with the self-control just to not spend the overdraft they have.

But there are downsides, the increased chance of it being recalled and the additional interest you will pay.

Another option that people consider is to continue to use their existing account but drop their overdraft limit every couple of months so they cannot respend up to the old limit.

If you really don't trust yourself to not be able to stop yourself from spending up to your limit then your method could work for you. But first check that your account doesn't require a set amount to be paid in per month and also consider what you will do if the overdraft is recalled, especially note when your next overdraft renewal date is.

But it would probably be better money management skills in the long term if you could take control over your finances and learn to always know exactly what the balance on the account is and budget to reduce the high point of the overdraft each month.

tking

You could have your wages paid in and then immediately transfer to your new account the full amount minus the 150 that starts to reduce the overdraft.

This avoids the bank recalling the overdraft as your wages are still going in.

Also, I would not recommend asking the bank to reduce it in increments - each time they do it can be recorded on your credit file and too many searches on your file reduce your credit score (for what it's worth).

Good luck.

always_overdrawn

I was going to reply to you all much sooner, but its been a busy weekend.

Thank you for all your comments, you wont believe how helpful they have been. I hadnt thought that my account might be closed down, or that gradually reducing my overdraft would effect my credit score.
To those of you have said essentially that I need to get more strict with myself you are right, but I really dont trust myself to the extent required to simply leave money in my existing accoun every month.

I am pleased to hear Natwest have in the passed helped in situations like this and I shall be heading there tomorrow. I will continue as planned but with less frequent reductions in the size of my overdraft this should teach me a small amount of discipline and help with the credit score thing.