Cut Overdraft Costs

MSE_Helen_S

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Thanks folks,

anniem07

Not sure if this is the right forum but hope you can help. Firstly I freely admit so far I have not been good with money. I am trying to get better but need your help. I have a credit card debt of 4k which I pay the minimum plus £50 per month. I also have an overdraft of £1950. Both are maxed but was mostly able to keep to the minimum payments. (The OD goes in and out )

In April, due to a restructure my income dropped approx £500 per month. I have not yet figured out a way to absorb this. The major impact has been on my overdraft as I have consistently gone over.I have attempted to minimise this using my meagre savings. I recently received my annual charges statement and have paid the bank £600 over the past year.

I got a letter today offering to increase my OD £2950. On calling they suggested a consolidation loan stating currently my credit card payments are 27% And my OD is 17.9%.

They say they can offer a loan as at little as 3%. Even if it is as high 10% would it make sense to go for the loan?

stclair

It might be worth getting a credit card that will allow you to transfer cash to your bank account interest free for a period of time. I understand virgin and mbna offer this facility.

colsten

Paying less interest on your debts means your charges will be lower, which should help you with getting out of debt.

If you post your SOA on http://forums.moneysavingexpert.com/forumdisplay.php?f=76, there will be a lot of people who can give useful advice.

enthusiasticsaver

I am not usually a fan of consolidation loans as the temptation for people who are struggling is to take the loan and then continue to overspend thereby accruing more debt.


In your case though the interest rate you are paying on both your od and your cc is quite high. Is 3% the actual apr or is it a flat 3%% added to the loan at the beginning? You need to read the terms and conditions as sometimes the deals they offer have catches.


Even if you were able to get a 0% credit card to repay both your debts there would be a fee so if the actual rate is 3% that is worth considering but you must address the disparity between your income and expenses and do not borrow anything else until the consolidation loan is repaid.

Kendo2424

I told Santander that I was worried about the new 40% overdraft  interest rate due to be applied from April and asked could they propose some help, such as lowering the rate.  They said they weren't prepared to change the interest rate but directed me towards loans and other borrowing, which 'may' be cheaper. Really helpful. 

TS66

After phoning Santander last week about help with an overdraft due to being in financial hardship and living on basic universal credit only which they had acknowledged in a call I made to them in March when covid started. The balance is a joint account with ex husband who is a high earner and is made up pretty much entirely of bank charges. I have previously tried to freeze the account following divorce but they wouldn’t let me and continued to add charges. Not only have they been unwilling to help on my most recent calls to them, they have, without warning me, removed the arranged overdraft which I only became aware of this morning (23rd) via a text saying I went into unarranged overdraft on 15th. I’m at my wits end about the likely charges they are now going to add and which I have no way of paying. They seem to be punishing me for doing right thing by only targeting me and not ex husband. I also thought they had to give you notice about withdrawing arranged overdrafts.

Old_Lifer

Unless things have changed nowadays,  an overdraft is repayable on demand       An arranged overdraft is just the bank agreeing in advance that you can overdraw from time to time up to the overdraft limit.

Sadly,   many people get to rely on their overdraft   and use the bank's money to fund their lifestyle .      They are often  In effect,    spending their income  a month before they receive it.  

eskbanker

TracyStanley said:

I’m at my wits end about the likely charges they are now going to add and which I have no way of paying. They seem to be punishing me for doing right thing by only targeting me and not ex husband.

What makes you think that they're not also contacting him about the overdraft?  Both parties are responsible for overdrafts on joint accounts so it's not just up to you to repay it.

At the risk of stating the obvious, this should all have been sorted out when divorcing, but with an overdrawn account, you're going to have to sort it out between you how that debt will be repaid, and after that you can then move on with your lives....

moneychat

I spoke to HSBC to help reduce and remove the overdraft charges at the height of the pandemic, they seemed helpful, however towards the end of the budgeting conversation, the man mentions they will remove them but it will be recorded on my credit file so I declined to have the charges removed. 

adamp87

moneychat said:

I spoke to HSBC to help reduce and remove the overdraft charges at the height of the pandemic, they seemed helpful, however towards the end of the budgeting conversation, the man mentions they will remove them but it will be recorded on my credit file so I declined to have the charges removed. 

I don’t understand how they would report that to your file. Unless they were going to cancel the OD?