Advice paying off overdraft

mindflowers1_2

Hi,

I am looking for some financial advice to a current situation I find myself in. Obviously turning to the internet to ask strangers for advice isn't the best option but it does open me up to the possibility of options I understand very little about or options I would have otherwise not thought about.

I graduated from University in 2013 and during that time I had a Halifax student account on which I had and still have a £2,000 overdraft. When graduating the account automatically turns into a graduate account. Meaning you have a 2 year interest free period.

Next month that interest free period is due to expire and the interest will become £1 per day or £30 a month. Meaning I would have to pay £30 per month just to keep the account a negative £2000. The £30 is automatically taken out of your bank each month, regardless of whether you have the funds which would then take the balance to £2030 > £2060 > £2090 each month not paid, on top of that you would be fined for going over the agreed overdraft limit.

Since leaving University I have only just this year managed to secure a job with a remotely decent enough wage to start whittling away at this debt. I work for an agency and so when the work is there the money is good, but the work isn't guaranteed and therefore there isn't a lot of security involved. It is an ideal stop gap whilst looking for a more reliable job.

Before this I was earning just enough to get by in part time jobs and didn't have enough disposable income to make a dent in the figure.

So. I am now currently in a place in which I want to whittle down this debt.

I aren't in a position in which I can ask parents for a hand out or help. But to be honest, I got myself in this situation and I would like to be responsible enough to get myself out of it.

I've tried bartering with Halifax but they are adamant there is nothing they can do and paying this £30 interest is the only thing I can do.

So what I have done is open a graduate account with Santander who would only allow me a £1000k overdraft. Santander offer graduates a 3 year interest free period as apposed to the 2 years that Halifax offers. I have used that £1k to pay off half of the Halifax overdraft, reducing it down to £1k.

So in theory I can forget about the £1k on the Santander account for a year and focus on clearing the £1k on the Halifax account.


Now. In an ideal world, I would be able to get a 0% interest free credit card for 24/ 32 / 36 months and put the 2k on it. Each month paying off amounts and whittling it away over a year or two. Unfortunately. This isn't and option as I was rejected for 2 different credit cards with Virgin and MBNA. This was when requesting only half the amount needed of £1k to pay off the Halifax portion.

I likely have a low credit rating due to me never having a; credit card, store cards or loans as well as having this 2k overdraft next to my name.

So hopefully someone out there could give me some advice and I thank you in advance for your time.

daveyjp

If you have the money to pay off a credit card why not go all old fashioned and open a savings account? Drop any savings into it and when you have £50/100 use it to lower your overdraft limit.

Alternatively if Halifax allow it reduce your overdraft limit by £50 every month and live with what you have left. Thats how I did years ago, not had an overdraft since.

CLAPTON

the first step would be to look at your income and look at your outgoings

try going over to the debt free wannabe board and getting some advice about reducing spending

although it might not help immediately, I would suggest you try to get a CC from either of your banks just to start building a CC credit history

eskbanker

mindflowers1 wrote: »

So in theory I can forget about the £1k on the Santander account for a year and focus on clearing the £1k on the Halifax account.

While I can understand why you split up your overdraft into two places, it potentially takes you into difficult territory given that overdrafts are repayable on demand. I'd expect graduate accounts to be treated a little more sympathetically but if you had two separate standard accounts with sizable overdrafts and were only funding one of them with any income then this would increase the risk of the bank where you held the 'unattended' account withdrawing the overdraft facility from you. Do either Halifax or Santander offer any guarantees (or even assurances or hints) that they won't seek overdraft repayment during the interest-free window on these accounts?

Rebecca56

I am in the same position but I have two accounts with an overdraft of over £1000 each. Since I graduated I have not done a good job in lowering my overdraft.

Thrugelmir

Convert the overdraft into a personal loan. May well save you interest.

IWillBeFree

As someone that has just paid off a £3K overdraft with Halifax, my advice would be to take a thorough look at your income and expenditure. Ideally, maximise your income by taking a second job or selling things or any other way you can think of and reduce your outgoings as much as possible.

Use your time and initiative to think of how you can get out of debt asap.

Your calculation of how the Halifax account would grow is incorrect as if you had exceeded the 2k limit, the charges are £5 per day so please think carefully about your financial decisions.

The debt free wannabee board is great for advice on budgeting and debt repayments.

All from someone that was where you are after uni.

IWBF x