Stop the overdraft fees and debt!

SparkyMacBlog

Hi,

I am in urgent need of help!!! It's hard to describe everything but here goes...

I have an overdraft of £1000 which I reach by the end of each month. I've made massive cutbacks, made a budget plan and worked out I can save (if I am good) £250 per month.
Here's the problem - I am being charged arranged overdraft fees for using my overdraft by Nationwide. As it stands, I pay 18.9%APR on this. I also have an existing personal loan of £579 at 13.9% APR (also with Nationwide).

I want the cheapest way of paying these off. Should I focus on paying off my overdraft over four mouths or should I get another personal loan (Zopa) at 9.5% APR, reducing the interest by 9.4% APR? Maybe get a personal loan for £1600 to pay off both at the same time? I know Zopa don't charge early repayment fees so I could pay more off if I want to. I plan to get rid of my overdraft so I never go back in it again.

Your thoughts would be much appreciated.

enjoyyourshoes

It is not often good to get consolidated loans as the original problem has not been resolved, and you just carry on as if nothing has happened, overspending.

If you save the £250 pm then by 3 or 4 months the od will be gone and you have realised a new money management strategy.

Can you agree better terms with bank with an arranged OD at less apr?

Then look into ERC with loans, so do some don't, then strategy to pay this over the subsequent 2 months.

There start saving !!!

tori.k

If you can save £250 pm and snowballed your debt then what you would pay in interest probably wouldn't be that much more then the cost of setting up another loan, nose to the grindstone would see you free and clear by Christmas if not sooner.

SparkyMacBlog

Thank you for the quick responses!

So basically, i need to have patience and ride it out. I will focus on the overdraft as this has the highest APR and I will ring my bank today to see what they can do for me in terms of what I pay.
I will keep you all posted on what happens.

Thank you once again. I know I am not the only one with debt problems but this situation has been stressing me out for sometime.

EssexHebridean

Talk to Nationwide about the fees too as that seems astonishingly high - I'm with them too and was never charged anything like that amount for being in the red, I know that much. Check the top of your statement to be sure that you actually are authorised for the full 1k in O/D - and also look back over statements to see that you're definitely not going over it by even a penny as that will potentially make a difference.

You could also talk to them about whether they might allow you to change accounts - the Flexdirect I think comes with a fee-free O/D for a year although after that it charges a hefty 50p a day if I remember rightly - once you're out of the OD though it will also pay you interest on a credit balance, so there's an incentive.

While consolidating *can* work, mostly it doesn't. First thing is to work with your new budget for a few months to see that it actually does work, and that you have the £250 surplus that it says you do. A spending diary might be useful so you can see where odd spends are cropping up that may not have been included. Have a think also about odd ways of boosting your income a bit - even things like surveys can help a bit - you could potentially make an extra £20 a month or so there.

Grazeley

When we were in trouble with a £1500 overdraft, which pay day would clear then we would need to use again to pay bills etc, plus pay an overdraft fee of £150 a mth it was a vicious cycle and I was advised to open a basic account with another bank (no overdraft cheque book but ability to pay bills and withdraw money and use as a debit card) and transferred all salaries and Direct Debits over to it, which meant we could then start chipping away at paying off the overdraft with the other bank.

SparkyMacBlog

Hi,

Thanks for all your support. Here's a quick update on what is going on.

First, I chose not to get another personal loan to consolidate all my debt. Instead, I am going to ride it out with a few rules a long the way.
I've made a serious budget and I am following it closely.
I've discovered minimalism and I seriously question what I need, making sure the current items I use are actually needed, which leads into the next rule.
I'm selling personal possessions such as my laptop and other items I don't need. I have currently made £280 towards paying off my debt.

I guess I will have to wait patiently until i have finally paid everything off. It feels great to see my bank account is much healthier at this time of the month.