Overdraft/packaged bank account help please

wildcat999

Hi all. I have a Barclays Additions Plus account, for which I pay £16 a month plus 18.3% overdraft interest. My income varies wildly as I am self-employed - sometimes I am a couple of hundred pounds in credit, but most months I have a debit balance of between -£500 to -£1200. I want to get rid of the packaged account as I use none of the features and I know it is costing me money, but where to go next? Would I be better off with their basic account (free, but 19.8% overdraft interest) or a packaged £10 account (up to £1000 interest free var, with extra £6 "home pack" £1000-£5000 14.9% var). Which would mean paying £16 a month anyway but hopefully my interest rate would be lower. Or should I try and move bank? Help please, really confused! Thanks in advance.

grumbler

Improve your money management (cut spending), make some savings and stop using overdraft altogether. Then change the account to the one that gives you the benefits you need at the lowest price of for free, not to the account with the cheapest overdraft.

wildcat999

Grumbler, thanks for your reply. That would be a wonderful idea in an ideal world, unfortunately I don't live in one yet. I spent virtually nothing, don't have holidays, Sky TV, don't drink or smoke etc. I am proud to say I have never claimed a single benefit although my life would be better if I had. But the reality of my working life is that I seem to be stuck in this overdraft, and I would really appreciate someone just helping me with the figures so that I can try and make a minor change for the better. Thanks.

grumbler

wildcat999 wrote: »

...But the reality of my working life is that I seem to be stuck in this overdraft, ....

This is a delusion. And if the money is that tight it's even more important to change this reality and to stop wasting money on the overdraft that generally is a very expensive way of borrowing money.
In the short run indeed it is worth trying to cut the cost of the overdraft. However, you must use this for getting rid of it altogether.
In the long run thousands of ££ flow trough you account and £1K is a small amount in terms of this flow. Make some effort and change the equilibrium position to £0+ from £0-.

Re cutting expenses and making some extra money see Debt-Free Wannabe board.
How is your credit history? If you can get a credit card get one with 0% offer on spending and use the 'saved' money to pay the overdraft off. At the end transfer the balance to a CC with a low interest rate.

Re the overdraft rates see, say, http://www.moneysupermarket.com/current-accounts/?source=GOO-3B9278F1&p=0&keywords=overdraftPhrase&mckv=syX5fyJss_pcrid_18602388685_mtype_p_kword_overdraft_2764ri918980&uuid=91ecbcec-6471-4e3c-8d3f-690315e8727f&gclid=CNvGleyx0bYCFSXLtAodbScAIw

However, yet again your ability to get an account you want depends on your credit history.
And I can only repeat that it is a very bad idea to keep using overdraft on a regular basis. You have to stop this.

wildcat999

Grumbler, thanks again for replying. It has been my intention to try and do exactly as you are suggesting, and part of the plan is to immediately try and get a cheaper overdraft while I work on getting rid of it altogether. I think this counts as cutting spending!! Are you actually able to advise me which is the cheapest option please?

YorkshireBoy

Nationwide FlexDirect may be an option.

The authorised O/D charges are 50p per day, so max circa £15 a month...that's if you're overdrawn for the entire month...you say you're not.

Better still, the O/D is fee-free for the first year, giving you plenty of time to get things in order with your budgeting and saving for a rainy day.

Total savings:

12 x £16 = £192
£800* x 18.3% = £146.40
Total savings over 12 months = £338.40


* Assumed average debit balance.

YorkshireBoy

wildcat999 wrote: »

Are you actually able to advise me which is the cheapest option please?

The best option if regularly overdrawn is here...

http://www.moneysavingexpert.com/banking/compare-best-bank-accounts#overdrawn

It's the account I mentioned above.

wildcat999

Thanks Yorkshireboy, I will look into this.