Borrowing

ReadingTim

If the APR on the loan is lower than the rates for the O/Ds, then yes, mathematically you will be better off.

However:

You may not get a lower loan rate than the O/D rates...
...especially as you're doubling your level of indebtedness...
...and there's no guarantee you won't then slip back into the O/D

Have a look at the debt free wannabe board - there are plenty of people there for whom consolidation loans (as you're looking for) haven't worked, and they've just got themselves into a hole twice as deep as the one they were in previously.

Better to increase your income, reduce your outgoings, live within your means and throw every spare penny at the O/D - £3k should be achievable in months, not years.

luckybert

Wise words.

I feel I live within my means, I'm in a position that is alien to me.

About 5 years ago I earn't 40k had a healthy bank balance and never paid any interest or charges. There were times when I hadn't touched my salary from the previous month and paydays came and went with no impact on me. Holidays and items I needed were bought without saving.

Things then changed and I had to start saving for items and now I don't buy items and am in debt.

Whether I'm living beyond my means I'm not sure. Yes I need to earn more but find that jobs are paying less these days and I'm having to lower my expectations for work. I have reduced my cable package from movies, sport to just broadband, tv and a freeview recording box. I walk to work instead of driving and lately have been cooking for my girlfriend more as opposed to dining out. I always compare online when car or house insurance is due and buy my birthday cards from funky pigeon when they have deals on.

I'm not sure where else I can save.

I have £32000 tied up in my house but unfortunately I am contracting so cannot get a remortgage which would allow me to get some of that positive equity.

foxy-stoat

luckybert wrote: »

like a lot of people then.

It just clears immediate problems and gives me longer to sort out finances or am I missing something.

I think you are missing something yes, as you are not comparing like for like.

If you continue to pay your £25 a month into the overdraft you will get charged £6 (assuming thats a fee rather than interest rate), taking some 13 years to clear.

If you pay £130 into the overdraft account then it will take you only 2 years to clear it, assuming the £6 a month fee is constant.

If you can get a loan for £3000 over 2 years at the lowest rate possible, cancel you overdraft and keep paying the £130 into the loan you will not be any better off, only the feeling that you are not in your overdraft. You may or may not be offered the lowest rate.

By all means apply for it and see what rate you are offered - if you do proceed then you have to cancel your overdrafts or you may be in a worse position in a years time.

One thing to consider is, if you have not had the £105 spare at the end of each month, you will have to cut your living expenses to compensate for the extra payment.

Good lucks

Gaz83

This is absolutely mental talk.

If you feel the £25 isn't clearing the other debts as quickly as you'd like, then pay more to them.

Minx

Have you tried talking to your bank/banks?

Why don't you talk to your current bank and see if they will pay off the debt on the other account - and close it - with an agreed overdraft limit? See if you can get this interest free but at least if you've got an agreed overdraft you shouldn't have to pay fees?

luckybert

The debts/overdrafts are with different banks. You are saying that one of them possibly could increase my overdraft limit?

For example my overdraft limit is £100 and I'm £900 overdrawn in account 1

In account two I have same but I could increase my overdraft limit to 2k and use the money to clear the other?

enjoyyourshoes

You are dealing with the symptom and have yet to really focus on the problem.

The problem unfortunately is you are spending too much.

It may be little things that just add up every day or may be bigger 'wants' that are not needs.

You possibly need an epiphany moment when you see the woods and not the trees.

Many posts above have given words of encouragement of where to start looking, this needs effort on your part and some realisation that things can get better but change needs to happen.

Good luck, but consolidation may not be the right path.

DCFC79

Be careful with the overdrafts as they could withdraw the facility and ask for it to be repaid at a quicker than what your paying.

Maybe look at the debt free board and post an soa or cut back on stuff to then pay off the overdrafts quicker.

Angry_Bear

It works like this....
You have a £900 overdraft on one account, and regularly dip into your overdraft on the other.
You have £131 available to repay debts each month (otherwise you can't afford a £3000 loan). You could either
a) get a £3000 loan, assuming you are accepted, and pay £131 per month off this to repay in around 2 years.
b) Pay £131 into your £900 overdraft every month to clear it off in 8 months.You will then have £131 more in your other current account than you are sepnding each month. So it should (in theory) be less and less into the overdraft every month.
Overall it depends on what you are paying for your overdraft on the second current account, but method b) would mean you only pay a total of £48 interest on the £900 overdraft before it is clear.

That being said, if you have £131 "available" every month, then the amount you need to dip into your overdraft on the second account should be decreasing every month anyway. If not, then you need to look a bit more carefully at your spending and budget. Try filling in a SOA if you find - as many people do - that what you think you have available doesn't quite match reality.

glentoran99

DCFC79 wrote: »

Be careful with the overdrafts as they could withdraw the facility and ask for it to be repaid at a quicker than what your paying.

Maybe look at the debt free board and post an soa or cut back on stuff to then pay off the overdrafts quicker.

100% this, expecially if your maxing it out each month