Made a mess up! Overdraft!

MrsDavo

Hi All,

I had an old account that I was paying an overdraft off on. The overdraft was £400. I could only pay £10 per month ( it was enough to cover the £5 interest and pay £5 off ) and I had been doing this for a year or so.

Didn't check the account regularly and this has resulted in a mess!

So I have just landed a much better paid job, and had my LBM and wanted to start paying more off my debts. Signed up for YNAB and wanted to get how much was left to pay on the OD.

Signed in only to find the account sitting at -£700! For the last 4 months my payment didn't cover the interest charged and therefore I've been charged £90 each month for the unarranged overdraft!

My own stupid fault, I should have kept a tighter reign on things.

Anyway, I have a Credit Card with a 0 balance. The interest rate is 29.9% though.

I just wondered if the best way to stop getting these £90 charges, is to pay all my food budget ( from YNAB ) and anything else I can spare to it this month when I get paid tomorrow and use my CC for food for the month and then pay that off over 2-3 months ( I will have the spare cash. I currently have around £400 disposable )

Say I was to put £300 in food shopping on the CC how much interest would I pay over 2-3 months if it had a rolling balance ( just minimum paid until the 3rd month? )

Even if I just get the overdraft back into the arranged one ( which is £400 ) would that stop the £90 charges?

I think there is another charge due to go on tomorrow, making it £790 in the red - so if I was to pay £400-£450 off it tomorrow when I get paid, would this stop another £90 charge in March?

Thanks for any help in advance.

sourcrates

Before you do anything else, write to the bank, explain the situation, and ask them if on this occasion they could stop adding further fees and refund you the charges to date, also put in an offer to repay the balance at a rate you can afford at the same time.
If you don't tell the bank your situation, they just treat it as non payment, so tell them, you may be surprised.

twiggy86

I would speak to the bank first. A few years ago I had a similar situation where I'd gone over my OD not realised and had incurred charges. I we y into the branch, was very honest and also genuinely a bit upset/frustrated with myself and the bank agreed to increase my OD so that I didn't incur further charges and I think they may have wiped the last charge.

andyfromotley

Explore all other avenues before putting anything on a card with a 30% interest rate.

[Deleted User]

If the OP is getting charged £90 a month (that's £1080 a year) in overdraft fees, with a balance currently at £700, that's essentially a 154% APR.

Putting spending onto the 29.9% APR credit card will be vastly preferable for now. Even if the full £700 goes onto that card, it'll attract £209.30 interest a year (which is £17.44 a month).

Not saying it's the best option, but it's certainly better than keeping on racking up £90 a month to the bank.

enthusiasticsaver

The first thing you need to do is speak to your bank and see if they will increase your overdraft limit so it would be an arranged overdraft which will incur lower charges. They may do that if you now have a better paying job.


It is not normally a good idea to rob Peter to pay Paul in debt management - ie borrow on a credit card to pay off an overdraft unless there is a significant difference in interest rate. If the bank refuses to help and continues to add a £90 fee then I would see if you can get a better rate on a credit card as a last resort. It depends though on your credit rating and how much you can afford to pay off each month.

MrsDavo

Thank you all for your advice. It hadn't occurred to me to ring the bank and explain the situation to them! I will definitely do that and see if they will stop the charges, or at best refund some of them!

I don't want to put anything more on my CC if I don't have to, I'm trying to get out of debt not in more, but as bill bennett said if the bank won't help me then that is preferable to paying £90 a month in charges!

The full £700 wouldn't go on the card, as I'd purely use it for food, and move my food budget to the bank instead.

I'll let you know how I get on. Thanks Again

FireWyrm

billbennett wrote: »

If the OP is getting charged £90 a month (that's £1080 a year) in overdraft fees, with a balance currently at £700, that's essentially a 154% APR.

Really opens the eyes doesnt it. The FCA has just spanked Wonga and other PDLs for being naughty and capped the interest to a maximum of 100% by law and yet banks can continue to charge outrageous overdraft fees and no one bats an eyelid.

OP, might be worth pointing this little calculation out to them....

MrsDavo

Thank you so much all for your advice!

I just called the bank ( first chance I've had ) explained the situation to the lovely girl, and she tried to get all charges refunded for me. Unfortunately she couldn't as there was no manager there after 6pm to authorize it, but she has marked for someone to give me a call back on Monday in order to do the refund. If they do manage to refund them all it would be amazing!

So I will let you all know, but thank you so much for advising me to do that, I was so worried!

sourcrates

MrsDavo wrote: »

Thank you so much all for your advice!

I just called the bank ( first chance I've had ) explained the situation to the lovely girl, and she tried to get all charges refunded for me. Unfortunately she couldn't as there was no manager there after 6pm to authorize it, but she has marked for someone to give me a call back on Monday in order to do the refund. If they do manage to refund them all it would be amazing!

So I will let you all know, but thank you so much for advising me to do that, I was so worried!

If you don't ask, you don't get, hopefully a positive result for you !!!!!! 😊

Evil_Olive

Good luck with getting the charges refunded - have my fingers crossed for you.....

This is a bit vague, and I may (probably) have got it confused with something else, but.....
I seem to remember some sort of new guideline/law/ruling being reported a while back which meant that a bank was no longer allowed to apply charges that come about as a direct result of them applying other charges (eg. applying interest charges which take you over your overdraft limit, which result in them applying a charge for going over your overdraft limit)

Anyone more knowledgeable know what I'm talking about and whether it would affect the OP?