How do I repay my overdraft?

Pantera_Fan

assj wrote: »

I want to repay £50 pcm. I have heard that you cannot reduce the OD amount monthly because you are credit checked each time and you may not even be allowed the original amount (i.e. need to repay in full)

Have you actually spoken to Halifax about regularly reducing the OD? When I had a £2k OD with LTSB they agreed to reduce the limit each month for 12 months (the longest time they would do) and then withdraw it completely afterwards.

Or in addition to the other solutions posted you could try a 0% purchase card and use it for your everyday spending that would normally come out of your OD (food, travel etc) and leave that money in the account to pay off your OD. No transfer fees to pay but could cost more in long run if do not pay off before 0% period ends.

[Deleted User]

Pantera_Fan wrote: »

Have you actually spoken to Halifax about regularly reducing the OD? When I had a £2k OD with LTSB they agreed to reduce the limit each month for 12 months (the longest time they would do) and then withdraw it completely afterwards.

Or in addition to the other solutions posted you could try a 0% purchase card and use it for your everyday spending that would normally come out of your OD (food, travel etc) and leave that money in the account to pay off your OD. No transfer fees to pay but could cost more in long run if do not pay off before 0% period ends.

Thank you! That's exactly what I'm going to do! I'm not stupid but for some reason I just didn't think of that. Then I can deal with it like all of my other debts (current and past).

Simple idea and it will help me a great deal. I wasn't looking forward to trying to manage a savings account and or reduce the O/D.

I want to keep the O/D limit because I like to feel that I have the means should their be an emergency and that way savings don't need to be easy access. Because I have a little savings (yes I managed to get some this year, myself shocked! )

Thanks again to all

vics199

heyjude2013 - I'm worried for you about your plan as your bank is likely to send you a letter telling you they are taking your overdraft away and will only give you about 30 days notice for repayment. You need a regular income into your account to support a decent sized overdraft ie your wage needs to be more than your total overdraft.

I know a few people are saying to prioritise paying back your overdraft but as long as you meet the terms and conditions then they won't take it away from you. As long as you don't go over your agreed overdraft limit and your monthly income is higher than your total overdraft amount then you are fine. The bank even confirmed that for me yesterday when I went in to discuss my finances (I bank with NatWest). I'm not proud to live in my overdraft but I have done for 8 years and am likely to for another 2 years whilst I pay off other debts first. Another reason for leaving it until last is that it looks better on your credit rating to have paid off your credit cards rather than your overdraft and for me that's really important as I need to be able to get another mortgage in 2 years time (the bank confirmed that paying off the credit cards first was the best plan).

ValHaller

vics199 wrote: »

I know a few people are saying to prioritise paying back your overdraft but as long as you meet the terms and conditions then they won't take it away from you. As long as you don't go over your agreed overdraft limit and your monthly income is higher than your total overdraft amount then you are fine. The bank even confirmed that for me yesterday when I went in to discuss my finances (I bank with NatWest). I'm not proud to live in my overdraft but I have done for 8 years and am likely to for another 2 years whilst I pay off other debts first. Another reason for leaving it until last is that it looks better on your credit rating to have paid off your credit cards rather than your overdraft and for me that's really important as I need to be able to get another mortgage in 2 years time (the bank confirmed that paying off the credit cards first was the best plan).

Oh dear. I'll give the link again http://forums.moneysavingexpert.com/....php?t=4571929

Banks can and do take overdrafts away - or in the case in the linked thread, halve the overdraft overnight.

If you keep your overdraft while you pay down other credit, then true enough, your credit record may look better because your credit card profile looks lower at the expense of a higher overdraft profile. But you risk the bank taking away or reducing your overdraft - with the consequence that you risk gaining a default or Arrangement to Pay markers.

Your advice here is very risky if the idea is to keep your credit record clean for a mortgage and I would only suggest not clearing the overdraft for anyone who is for whatever reason not concerned about their credit record.

Remember that the bank holding your overdraft may well advise paying down cards with other lenders - not because it is genuinely better for you, but because it is better for them if you are paying them for your overdraft. Please do not be naive about this.

Money_mayhem

I'll tell you what I did. I also banked with Halifax and have an overdraft of £2400. I changed my bank to First Direct before reading the small print from Halifax. Initially I was going to change banks and the drip feed spare cash into Halifax to clear the OD but then I got scared when I read the small print...basically because I wasn't banking with them they didn't have to honour the OD limit. My charges are around £60 p/m. So, I applied for an MBNA card that does Bank Transfers, it's around 20 month 0% and a 4% fee, which in the long run will be cheaper than the bank charges. That is how I intend to clear my OD.

Good luck

Mm