does this make sense?

joesab

Hi, firstly, I have never had a credit card so please bear with me if I seem to be going round the houses in explaining.
i have a lloyds current account. usually overdrawn each month by amything from £1000 to £1600. This account is to pay rent and bills and my main salary is paid into it. My partners salary is paid into her sole accoiunt and pays for food shopping.
Until last October ish, the interest and charges on lloyds were about 35 ish per month, depending on whether i have any overtime at work.
Recently overtime has stopped and partners part time hours are fluctuating so we have had to use more of the overdraft than I am comfortable wih to pay for food but no choice .
Lloyds have changed their fees to a daily rate and on occasions I am being charged anything up to £2.88 per day PLUS monthly usage fee of apprx £20. I can get the overdraft down to , for instance, £1000 then monthly rent of £600 comes out and the daily fee jumps sky high
My question is this.. if I apply for a credit card and use it for daily spending such as food and petrol and pay it off on or before the due date, there isnt a fee to pay to the credit card company..is that right? Obviously I would have to pay it off using lloyds overdraft but my thinking is that this is a way to stop the daily fee increasing for anything other than household bills . If i use the card, i would still be spending the same amount on shopping but it wont be costing me an extra amount per day.
Thanks

J_B

Hmmm ... think the answer to your question is that you are correct, but maybe starting by trying to reduce your outgoings (bills etc) would be a better place to start perhaps???

joesab

weve looked into reducing what we can and bills wise, its not much. On lowest phone sims, gas and elec checked on MSE , etc. The inittial part of the overdraft stems from a few years back, we were really in a mess and although on our feet now, havent been able to catch up.
These new fees are ridiculous - if I could pay that overdtaft off in one go i would close the account. But the grim reality is that even if i pay it off, with work hours varying so much, we need the overdraft just in case.
Hopefully if i can reduce this daily fee by not using the overdraft for shopping it'll get back to manageable again.

YorkshireBoy

If your "main" income is paid into Lloyds where is your additional income paid?

Is your partner's account also overdrawn? If not, it makes little sense for theirs to be in credit whilst yours is incurring overdraft charges.

Are any of your charges for unauthorised overdraft use, or are they all for authorised overdraft use?

Your problems don't appear to be down to the recent loss of overtime (which you shouldn't base your outgoings on anyway) or your partner's fluctuating hours, being as you were using your overdraft facility quite deeply last year even before October.

So whilst debt restructuring may help a little, the big improvement in your situation will come from increasing both your incomes and cutting spending. So what are you both doing on that front?

joesab

hi - ''main income ; is my full time hours. partners account not overdrawn
authorised overdraft wth lloyds.
we are both on zero hour contracts although until recently, hours at both jobs have been full time. Mine have decreased slightly and overtime has stopped whereas hers have dropped quite a lot. I also have a weekend evening job which is seasonal so that wont be on the cards again until possibly April/ May.
Difficult to do much about jobs at the moment - partner needs to stay where she is as her hours fit in with kids. If she moved jobs, we may end up having to pay child minders anyway.
We live quite frugally though, no sky tv or expensive mobile phone deals. When the rent comes out, its a huge wallop on the daily fees but then as my wages go in (paid weekly) the overdrawn amount reduces over the month UNLESS we need to use it for shopping (tried feeding the kids on gruel and water, theyre not having it..)
Id just like to be able to deal with these daily overdraft charges and if a credit card can help me with that Ill give it a go

J_B

Would you perhaps be better with a 'proper' loan, which may be cheaper than an overdraft?

YorkshireBoy

joesab wrote: »

I also have a weekend evening job which is seasonal so that wont be on the cards again until possibly April/ May.

So get one that isn't seasonal, then drop the seasonal one!

We live quite frugally though, no ...expensive mobile phone deals.

Cancel the ones you've got...and go PAYG like we did back in the days? Save you what?...£20 a month? That's half your overdraft costs there.

(tried feeding the kids on gruel and water, theyre not having it..)

Give 'em 2 or 3 days. They'll eat it when they're hungry.

Id just like to be able to deal with these daily overdraft charges and if a credit card can help me with that Ill give it a go

In using a card as you've described you're only going to save one month's O/D charges aren't you?...if you're repaying in full.

In making the suggestion I'm about to make I could get you deeper in debt, but a 0% on purchases card would buy you some time...maybe 24 months...to get yourselves sorted. Plenty of time to get that non-seasonal job sorted.

Alternatively, a Money Transfer card could be used to clear the overdraft from day one. But...if you did clear it this way are your current outgoings less than your current incomings excluding the overdraft charges?

One final thing...can you choose a new monthly direct debit date for your utilities?...right back to the end of the month? This could give you a month of reduced charges.

joesab

Thanks for your help, quite a bit to look into but we will be sending the kids off to nana's house tomorrow evening so will have time to look at the info on here.
Think ive worded that phones sentence wrong - were not on expensive phone deals,,, £9 and £7 from three.
Yep, outgoings are less than incomings
Never thought of changing date of DD, will look into that

joesab

J_B wrote: »

Would you perhaps be better with a 'proper' loan, which may be cheaper than an overdraft?

Ill have a look into that , thanks

Dobbibill

All of the above are excellent suggestions.

You also need to find out what you've been charged £20 for - there is no monthly usage fee any longer so that charge is for something else.

Kim_13

Are you paying your council tax over 12 months rather than the default 10?

Depending on your mobile usage giffgaff could be worth a look, as they offer free calls and texts to giffgaff numbers. Could be even more useful when the kids get phones. Bundles are decent without a contract and they have a forum where you can earn credit or cash for helping. Alternatively, consider whether Three's 3p/minute, 2p/text and 1p/MB pay as you go could save you money.

Here is a link to the MSE guide on money transfer cards, in case it is useful: https://www.moneysavingexpert.com/loans/cut-loan-overdraft-costs

And the same for 0% purchase cards: https://www.moneysavingexpert.com/credit-cards/best-0-credit-cards