Paying off overdraft - advice needed

Jimmy_Bob

Hi

I'm new to this site so I hope I've posted this in the right place.

Basically, I'm after some advice on paying off my overdraft account.

I have a £1500 overdraft with Barclays which I am constantly in and due to the new charges, I am now attempting to pay this off.

I have opened a new account with Nationwide who have offered me a free overdraft for twelve months, however they have only offered me £750 so I have not transferred my Barclays account over just yet.

What would be the best course of action to take, would it be possible to use the £750 Nationwide overdraft to reduce the £1500 with Barclays and attempt to pay the rest off myself?

Or would I be better leaving the Nationwide account untouched until I have paid off the Barclays overdraft in full?

I'm pretty clueless so any help would be appreciated!

a4a

The only real difference is that £750 will be free in one and not the other, so you may as well use it. If you run the new one correctly, you may be able to increase it within 12 months so that you can then pay off the other one and have an interest free OD until that is paid off.

You could also swop money backwards and forwards between the two accounts which will help to improve your score with them and thus help to get an increase sooner rather than later.

Tixy

Hi

Definitely worth using the £750 free overdraft to reduce the barclays overdraft.

But you also ideally need to be looking at how quickly you can reduce the rest of the barclays overdraft.

Do you currently use all of the £1500 by the end of the month? If so then have you worked out how much you can afford to pay off the overdraft each month? (that is what you can reduce it by and not need to re-spend).

Jimmy_Bob

Tixy wrote: »

Hi

Definitely worth using the £750 free overdraft to reduce the barclays overdraft.

I was thinking that this would be the best bet, thanks for your help!

lauralouise90

Glad you've got this sorted - paying off overdrafts is the worst - I've just finished paying mine off but it took an awful long time!

ganderson1804

Are you planning to transfer all your income / outgoings to the Nationwide account? You may need to look at your SOA to make sure you don't end up in the same situation again, only you wont have an overdraft to rely on as it will already be maxed out.

If you're not transferring over make sure you regularly pay some money into the nationwide account otherwise they may retract the overdraft facility at very short notice leaving you to either settle in full or enter an arranged repayment scheme with them which will affect your credit file.

Speaking from past experience - just gone through this exact thing myself!

allybee101

Yup make use of the free N overdraft facility to reduce your interest payments on the £1500 B overdraft. Use that spare money to help pay off the old overdraft as quick as you can. You might find that if you don't have regular money going into the account that B will recall the overdraft facility and demand immediate repayment.

You can then focus on paying off the new smaller N overdraft.
I would advise that you also check out the interest on the new overdraft after the 12 months free - make sure there's no nasty surprises. Which is why it's worth reducing that N overdraft before the offer ends.

Jimmy_Bob

Ganderson1804 wrote: »

If you're not transferring over make sure you regularly pay some money into the nationwide account otherwise they may retract the overdraft facility at very short notice leaving you to either settle in full or enter an arranged repayment scheme with them which will affect your credit file.

Yes, I'm going to be paying £200-300 into the Nationwide account per month until the Barclays overdraft is totally cleared, then I'm going to basically switch accounts to Nationwide.

The way Barclays have changed their charges on their overdrafts has finally given me the kick up the a**e to sort myself out!

ganderson1804

Fab! Sounds like a good plan, if I were you vow to reduce the nationwide overdraft down to an emergency £250 or so to avoid the temptation of using it again. Good luck on your debt free journey x

Savingwithnomoney

Definitely use the interest free overdraft - less interest.

Minimalistdebt

I'm in the same situation - I'm actually going to use a card that doesn't have any overdraft, and pay my salary into that so I can manage it better. Otherwise I will just be in my overdraft all the time and it's just more depressing and difficult to sort. I would say get rid of the free overdraft in the new card, and just make small payments from that (if that makes sense) so at least one card is in credit and you can see everything clearly. That's my plan as well...good luck, over drafts are horrible as when you get paid it doesn't make a difference!