Bank hasn't noticed error but it's a matter of time...

l0bster

First post! I've looked and I'm not sure what else to search, so here goes. If I missed a previous answer please just point me there.

My wife has a student overdraft of £1400 which we haven't managed to pay off yet. It should've gone to a Graduate and then to a normal one in steps, with the interest-free bit gradually reducing until the whole thing charged interest. We've just reached the point where interest should be charged on the lot.

Somehow the bank hasn't noticed. This feels to me like a ticking time bomb just waiting to go off. When will the bank notice? What will happen when they do? Should we do something about it now? Should we try to negotiate a payment plan with them directly? So many scary sounding options, none of which are guaranteed.

To address some other debt at the same time, we've opted for trying to get a long 0% credit card with good rates on money advance and balance transfer - I believe I may be approved for what I have applied for, but probably not a high enough limit to cover the full amount of our debt, which would be the hope. My wife was declined for a balance transfer card this month so I feel a lot is riding on my ability to get an offer that will help.

We have already paid off a LOT of debt this year - nearly £4000 worth - and have another £3000 to go (including this overdraft). But the way we've done that is to cut and cut and cut spending in so many areas and now those ruthless cuts are biting us in the !!!! - clothes are threadbare, car needs serviced, Christmas is coming, etc. We do many things very cheaply and plan meals, budget, etc.; our current spending is not rife with opportunities to make further savings.

We have just done a massive budget tune-up have sorted a more balanced approach which will stop us getting into this cycle again, but this credit - debt - interest time bomb issue is still plaguing me.

Until three years ago I had always been debt free so this has been a really stressful three years for me especially... I was raised never to do certain things, always save, etc., but I never was taught how to get out of debt!

If anyone has ideas or suggestions about this overdraft situation - while the bank hasn't noticed it's all fine and dandy but as soon as they do I just feel they'll pounce and call in the full amount plus interest. It happened to my old coworker last spring so I'm terrified of it happening to us too!

Dobbibill

Easier said than done but try not to stress yourself about it. You have done fantastically to pay off the debt that you have so far this year. You should be proud of yourself.

If you get the 0% card you have applied for then use that to move as much as possible and then look at formulating a plan to tackle the rest. Even if it's only small amounts to start with, it will all help. You can't set a plan in place until you know what credit limit you will be offered.

Try eb@y for clothes or even freecycle sites. You'll be surprised what people give away or sell really cheaply.

If the worse case happens then look at making an arrangement with the bank. Chances are that they will not recall it immediately but just switch to charging you interest/fees for it.

concrete_kid

They can call it in, but I think that's unlikely. It's in their interest for people to not pay it off. I had mine for 10 years after graduating, until i got fed up and giving he bank my money.

l0bster

Thank you! This makes me feel so much better.

We are doing exactly that and I'm hopeful for the next six months - I made a backup budget which would enable us to pay off the debts in staggered stages including a range of options that includes worst case scenario (no 0% transfer, pay it off the hard way). Whew.

Guess I just needed a bit of encouragement!

l0bster

I just really hope they don't start charging interest on it now we've got a plan to pay it all off! :wall:

Dobbibill

Hang tight to any plans until you find out what's happening with that card. That could make a world of difference to how/what you pay off first.

You've done over half of the debt, don't forget how far you've come when your busy looking at how far you have to go.

DB

Westie983

The same happened to me and they finally caught up with me and admitted their mistake and they changed the account to the correct payment schedule which was £500 at 0% and the rest was 18%, In line with third year after gradutation.

I then got the balance down to £499, till they tell me that I will owe interest on the remainder, I have also noticed that my account now shows as graduate rather then student and I believe that it will be called back sometime in the next few weeks as the new term starts in September.

They wont call the whole OD in they will just align the debt as per the guidelines, when they realise.

mine was £1600 year 1 after graduation, £1000,00 year 2 and £500 year 3. at 0% and the remainder is charged at the normal rate of OD.

** note I graduated in 2011,

greensalad

I'm in the same situation as you, mine has not decreased! Though it has only been a year.

What I would do is a) try not to worry. If they call it in then you can arrange a payment plan b) don't do anything on the account that would cause it to be flagged.

My understanding is that most of these accounts are not reviewed by humans, but when you do something to the account, it might register a change on the system that flags it up. Therefore I would recommend any savings you make towards this OD you make elsewhere, as depositing large sums and not paying out of this account might trigger something. If you save up £1400 in an ISA then you'll earn interest while you save and can then be ready to pay the balance in full and close the account. They shouldn't be able to sting you if you have the full amount.

cakeforbrains

I graduated in 2008.

Despite my informing the bank of name changes and address changes, and even mentioning that it was a still graduate account when I opened savings accounts for my sons, they left it. So I had an interest free overdraft of £2000 right up until I paid it off last month.

Seven years post graduation.

Edit to say: I was deep in it almost that whole time.

andrewbro

I have had an interest free graduate account overdraft since 2003! There have been times when they have said "I see that you still have a graduate account do you want to discuss changing it?" and I have answered "no" giving an excuse that I did not have time or similar. I did reduce the o/d to £400 and I am going to keep it as long as I can!

l0bster

I have to say, greensalad, that is basically our plan!! Leave that account the **** alone and then just pay it to zero in one fell swoop, hopefully.