How To Get Rid of £1,500 Overdraft

AngelEyes81

He had a period of eight months off work last year due to operation and recovery. This led to financial trouble. Now still at in debt with the overdraft of £1,500.

What is the best thing to do?

I've heard you can either:

Get bank to agree to reducing overdraft payments per month.
Get a 0% credit card and pay it all off.
Get a interest free personal loan to pay it all off.

So you're not having the fees the bank charge per month as well.

Just not sure what's the best to do and how you go about it?

National_Debtline

Hi there


A fourth option would be to change bank accounts altogether so that the debt stops accruing "live" charges, and then to contact the bank with a proposal to pay the balance off in affordable instalments based on what is left after paying one's essential living costs.


Interest-free credit to pay off the balance may not be available unless you are referring to an informal friend/family loan.


There is certainly no obligation on the debtor to remain "tied" to that particular bank and to continue running their everyday affairs through it just because they are overdrawn.


https://www.nationaldebtline.org/EW/factsheets/Pages/basicbankaccounts/openingabasicbankaccount.aspx


Dennis
@natdebtline

AngelEyes81

So an interest free loan from a loan company wouldn't be able to be gotten? Or a 0% credit card?

Thank you. If changing bank accounts though, would the monthly fees still be added to the account with the overdraft?

There isn't much left over at all after rent and bills which is why it's taking this long to sort it out.

Helvetica_Van_Buren

AngelEyes81 wrote: »

So an interest free loan from a loan company wouldn't be able to be gotten?

Which company is offering interest-free loans? I'd be interested in having one.

weebit

It's unlikely the bank would agree to stop charging you any interest/fees. Therefore it sounds like your best option is a 0% credit card. A balance transfer won't work though,, you'd need a "money transfer" which pays money into your bank account rather than from another credit card. MBNA and offers these, plus others.

If you can't get one of those, an alternative is a 0% purchase card - do your normal spending on the card (don't overspend), and the cash you would normally use to buy things adds up in your overdraft instead.

sourcrates

I think you must of drempt about the interest free loan option.

You can sort this out in an afternoon quite easily.

Your best bet is to do as Dennis suggests, get yourself a new basic bank account, manually transfer all your banking to the new account, then write to your old bank, advising them your having trouble meeting your essential living expenses, because of the charges, and ask them to close your old account, and freeze/stop interest.

You can then make them an offer to repay the balance, at a set amount every month, that you can comfortably afford.

I would defenatly get the new account whatever else you decide on.

If the bank won't agree to your terms, you could just default on the account and deal with it at a later date when your finances are in a better state, it really depends on what your credit file is like now, and if bad credit would affect your circumstances or not.

AngelEyes81

Thank you for your helpful replies.

I have no idea about loans, credit cards, and such like as I have never had any, which is why I am on here asking about it all.

All I know is what I've read online and that's not always to be believed, which is again why I came on here.

Does it have to be a basic bank account he gets if he opens a new one, if there's any major difference (besides the cheque book and the overdraft, the latter which he doesn't want anyway but never had issue with until his accident left him off work for that long)

Will show him the advice offered in this thread and go from there. Thank you.

sourcrates

AngelEyes81 wrote: »

Thank you for your helpful replies.

I have no idea about loans, credit cards, and such like as I have never had any, which is why I am on here asking about it all.

All I know is what I've read online and that's not always to be believed, which is again why I came on here.

Does it have to be a basic bank account he gets if he opens a new one, if there's any major difference (besides the cheque book and the overdraft, the latter which he doesn't want anyway but never had issue with until his accident left him off work for that long)

Will show him the advice offered in this thread and go from there. Thank you.

Basic bank accounts are available to all, without the need for a credit check, as you are not borrowing, as there is no OD facility, therefore no temptation to borrow money you can't afford to repay.

You can apply for a regular account without OD facility, but you will still be subject to a credit check and may be turned down.
T

MallyGirl

AngelEyes81 wrote: »

So an interest free loan from a loan company wouldn't be able to be gotten?

There is no such thing. How would they make any money if they didn't charge interest. A low interest personal loan might be possible - it will depend on the state of their credit history and their income/commitments. If there isn't much left after rent and bills where would the loan repayment money come from?

AngelEyes81 wrote: »

Or a 0% credit card?

They could maybe get a 0% on purchases card and use the money freed up to throw at the OD but the 0% offer will expire at some point and revert to something in the 20 - 30% range so it will need paying off before that happens. Otherwise they might be worse off.

AngelEyes81 wrote: »

Thank you. If changing bank accounts though, would the monthly fees still be added to the account with the overdraft?

They would have to ask for that account to be frozen/closed which their bank might do (but doesn't have to). It would impact on ability to get future credit

AngelEyes81

Thanks. As I have said I don't know about these things which is why I'm asking.

On the statement it said that some of the borrowed money could be moved into another account then arranging repayment of your borrowing separately over a period of time either by fixed monthly payments or a flexible approach.

The daily informal overdraft usage fee on the latest statement is £45 then the overdraft interest is £20.78

His credit was in a bad state years ago when his ex ran up a lot of debt in his name, he paid it all off. He rents his house, is back at work full time now.

There's so many choices of what to do I'm not sure what's best.

National_Debtline

Hi again

AngelEyes81 wrote: »

Thanks. As I have said I don't know about these things which is why I'm asking.

On the statement it said that some of the borrowed money could be moved into another account then arranging repayment of your borrowing separately over a period of time either by fixed monthly payments or a flexible approach.

The daily informal overdraft usage fee on the latest statement is £45 then the overdraft interest is £20.78

His credit was in a bad state years ago when his ex ran up a lot of debt in his name, he paid it all off. He rents his house, is back at work full time now.

There's so many choices of what to do I'm not sure what's best.

Essentially there are two choices (not including the third one of doing nothing!)


He can take up the bank on its offer of repaying his debt gradually while remaining with them. This may dissuade the bank from reporting adverse information to the credit agencies, but he may find he has less freedom to negotiate the precise rate of repayment.


Alternatively, he can move his banking affairs elsewhere as per my initial post, and then negotiate affordable repayments on his terms. This way, the bank cannot dictate what he pays but there is a greater likelihood of them recording a default on his credit file for the debt.


Either way, a thorough, detailed and accurate personal budget will be his best friend in this situation, as it will help him determine sustainable and realistic repayment proposals.


Dennis
@natdebtline