Overdraft advice

Lolly25x

Hi

I'm new here and was wondering if anyone could give me some advice regarding my overdraft.
A bit about my history - I've had a history of bad debt. Late payments, payday loans, credit cards etc... BUT I have taken control of myself and paid off nearly all my debt. I have had no missed payments or payday loans since Jan 2014.
I do however still have a £2,500 overdraft which I live in every month.
This is now what I want to focus on paying and clearing.
I cannot get a personal loan, due to my previous poor credit.
I have a TSB platinum account. I pay £27.36 in overdraft interest. £17.00 account fee. Is £44.36 a month. I am on the Platinum account because it has a lower interest rate on the overdraft.
I'm wondering what's the best way to go about paying my overdraft off? Has anyone had any experience? I just don't know if it was best to perhaps leave £100/£150 a month in and save the £2,500 ( which could be a bit tempting) or can I make a payment plan with the bank to freeze the account fee and the interest, but not adversely affect my credit. As I am trying to be very careful and rebuild my credit.

Any advice would be greatly appreciated.
Thanks in advance.

YorkshireBoy

Lolly25x wrote: »

I have a TSB platinum account. I pay £27.36 in overdraft interest. £17.00 account fee. Is £44.36 a month. I am on the Platinum account because it has a lower interest rate on the overdraft.

I don't think that's a valid reason at all. Classic EAR is 19.94%, and Platinum EAR is 17.28%

Unless you can justify it on the other benefits, get it downgraded.

I'm wondering what's the best way to go about paying my overdraft off?

There are 3 ways out of debt:

1. Earn more
2. Spend less
3. Restructure the debt, in order to lower the servicing cost

Since your past troubles are highly likely to prevent you exercising option 3 anytime soon, your only immediate options are 1 & 2.

Any request for 'special terms' will result in an arrangement to pay marker being put on your credit files...thereby putting you back to square one and undoing the good work done so far!

Thrugelmir

Lolly25x wrote: »

I cannot get a personal loan, due to my previous poor credit.
.

Go into your branch and ask for the OD to be converted into an affordable loan, and have the facility withdrawn.

You win.
Bank gets its money repaid.
Every one is happy.

Banks are commercially aware and have a duty to help their customers.

colsten

Lolly25x wrote: »

I have a TSB platinum account. I pay £27.36 in overdraft interest. £17.00 account fee. Is £44.36 a month. I am on the Platinum account because it has a lower interest rate on the overdraft.

This sounds as if you don't get any value from the other Platinum account features - therefore the £17 is actually part of your overdraft fees and you are kidding yourself that you get a cheaper overdraft than on a TSB Plus.

Also, a TSB Plus would pay you interest if you are in credit. This might be some time in the future for you, but something to aim for.

I would

1. make a budget - spend less to start with. Fill in an SOA, post it on the debtfree wanabe board and ask for help
2. ask TSB to convert the overdraft into a loan - they have a duty to help you to do that
3. not go overdrawn again under any circumstances
4. downgrade the Platinum account to a Plus account

grumbler

colsten wrote: »

This sounds as if you don't get any value from the other Platinum account features - therefore the £17 is actually part of your overdraft fees and you are kidding yourself that you get a cheaper overdraft than on a TSB Plus.

The monthly rate is 1.34% vs. 1.53% for a Classic account.

£2500*(1.53%-1.34%)=£4.75.

Indeed, it makes no sense to pay £17 to save £4.75 - and the 'saved' amount will get smaller if the overdraft balance goes down.
The most valuable breakdown cover can be had much cheaper elsewhere.

CLAPTON

Lolly25x wrote: »

Hi

I'm new here and was wondering if anyone could give me some advice regarding my overdraft.
A bit about my history - I've had a history of bad debt. Late payments, payday loans, credit cards etc... BUT I have taken control of myself and paid off nearly all my debt. I have had no missed payments or payday loans since Jan 2014.
I do however still have a £2,500 overdraft which I live in every month.
This is now what I want to focus on paying and clearing.
I cannot get a personal loan, due to my previous poor credit.
I have a TSB platinum account. I pay £27.36 in overdraft interest. £17.00 account fee. Is £44.36 a month. I am on the Platinum account because it has a lower interest rate on the overdraft.
I'm wondering what's the best way to go about paying my overdraft off? Has anyone had any experience? I just don't know if it was best to perhaps leave £100/£150 a month in and save the £2,500 ( which could be a bit tempting) or can I make a payment plan with the bank to freeze the account fee and the interest, but not adversely affect my credit. As I am trying to be very careful and rebuild my credit.

Any advice would be greatly appreciated.
Thanks in advance.

if you have paid off all your other debts then why are you in the overdraft each month?

Anthorn

Well of course you're living in the overdraft: Any credits such as income will reduce the overdraft and any debits will increase the overdraft again.

My first priority would be to protect income if that income is being paid directly into the overdrawn account. Probably the only way to do that is to open a new bank account and move income to that account. Then credit the overdrawn account to clear the overdraft - probably dividing the overdrawn balance by 24 will provide a reasonable monthly payment. The consequences will likely be that the bank will withdraw the overdraft and require immediate repayment the failure of which will result in a default and account closure which likely means interest freezing and saving on those hefty fees. But since you already have a history of bad credit you don't have a lot to lose.

The other way as previously stated is to debit less than you credit so the overdraft reduces which means spending less.

Lolly25x

CLAPTON wrote: »

if you have paid off all your other debts then why are you in the overdraft each month?

Why such a rude comment? I came to ask for some help.
I am in my overdraft every month because my wages do not cover my overdraft, then I obviously still have living costs. And been making monthly payments to my debt. Which is now mostly gone and I am getting ready to focus my money on my overdraft.

That's really interesting about my bank account. I'm annoyed as it was the bank who told me I would be better off doing that. The only other feature I use is my mobile phone insurance.

I really don't want to do anymore damage to my credit report.

Thanks for all the replies!

NotRichAtAll

Lolly25x wrote: »

Why such a rude comment? I came to ask for some help.
I am in my overdraft every month because my wages do not cover my overdraft, then I obviously still have living costs. And been making monthly payments to my debt. Which is now mostly gone and I am getting ready to focus my money on my overdraft.

That's really interesting about my bank account. I'm annoyed as it was the bank who told me I would be better off doing that. The only other feature I use is my mobile phone insurance.

I really don't want to do anymore damage to my credit report.

Thanks for all the replies!

i'm not sure he/she was been rude, i thought the same. looking at it simply :- you had loads of debt, you paid a good portion of it off, so on paper you would be better off?

on a more constructive note ask your bank to convert it to a loan, and down grade the account paying £17 is in my opinion a waste

PeacefulWaters

Lolly25x wrote: »

Why such a rude comment? I came to ask for some help.

Take a step back and ask yourself the same question instead of being so offended. You've posted asking for help and somebody's asked you a question that may get you to the root cause.

If you've paid off other debts that's great. Well done. But what are you now doing with the payments that used to service the other debts? Think long and hard about it.

I am in my overdraft every month because my wages do not cover my overdraft, then I obviously still have living costs. And been making monthly payments to my debt. Which is now mostly gone and I am getting ready to focus my money on my overdraft.

So why not just state this instead of accusing somebody of being rude when all they have done is ask a question to try and establish facts which would then lead to help.

If the plan is to reduce your overdraft each month using money that's previously repaid other debts then you're heading in the right direction.

As the overdraft is accruing interest you want to reduce your balance owing on the day before payday each month. E.g. if it was £2,500 this month set an achievable target of (my number) £2,300 for August payday, £2,100 for September payday, £1,900 for October payday etc.

There's no magic alternative. Other finance seems to be out of the question. A savings account will earn you virtually no interest whereas balance reduction will save you interest.

Crack on. Enjoy the challenge. Build on your success and stay disciplined.

Good luck!