Overdraft/debt advice greatly needed

FinancialThrowaway64

Hi guys,

Thanks first of all for reading and hopefully giving me some advice here.

State of play:

£1450 Santander arranged overdraft £750 Natwest arranged overdraft

My monthly net income is roughly £1700. Rent is £600.

Basically, I really need advice on the cheapest way of paying these overdrafts off, whether that is via a credit card (I've been in these overdrafts for a while now though so not sure how viable this option is) or perhaps a personal loan? I'm doing by best to research this myself but the options and information is quite overwhelming. Any advice here is really, appreciated. Thanks everyone.

[Deleted User]

It depends on your options, which are likely to be limited if you're living in your overdrafts.

Have you tried an eligibility checker?

You will probably need to do it the old fashioned way - spend less and pay it off.

theoretica

How much can you put towards paying them off each month?

FinancialThrowaway64

I think I can put around £400 per month towards paying them off. I was just hoping there would be perhaps a cheaper way of doing things?

FinancialThrowaway64

Deleted_User wrote: »

It depends on your options, which are likely to be limited if you're living in your overdrafts.

Have you tried an eligibility checker?

You will probably need to do it the old fashioned way - spend less and pay it off.

I've not tried an eligibility checker. Would moneysavingexpert be best for this? In an ideal world what would be the best route to go down with the checker?

System

Your debt is relatively small which is a good thing.

My advice. Don't get into debt to clear debt.

Have a quiet 4-5 months. Join a gym, cut back on the drink and focus on clearing this. If you can clear 400 a month of it do so. Yes interest isn't a great thing to pay but in 4-5 months youl be debt free which is great.

Rather than looking for a personal loan to clear the debt. You get the loan clear the debt make the payments and still continue to overspend. You end up getting the overdraft again next thing your in the same position only you have a loan to pay as well.

fatrab

https://www.moneysavingexpert.com/credit-cards/money-transfers

^^^ Read this first. If you are eligible for a money transfer card then I'd say that's your best bet. Whatever you're paying in overdraft fees just now is money down the pan. BUT you need to have some serious discipline going forwards. As soon as the overdrafts are paid off you must cancel them and never reinstate them! You must set the direct debit so that the balance is clear at the end of the credit card's 0% term. I reckon you probably already know all this but if you don't think you'll be able to do these things then getting a money transfer card is not the right option. I completely agree as above, taking out new borrowing to pay existing debt can be dangerous, it will only pay off if you have the strength and determination to stick to the plan!

So what if you can't (or don't) get a money transfer card? You need to have an accurate budget. "Thinking" you have around £400 isn't good enough, because if you leave yourself short you're not helping the situation. Likewise, if you could have paid more than £400 off the overdraft you will clear the debt faster and save yourself money in the long run. Reduce the overdraft that is charging you the most first of all. Reduce the overdraft limit as soon as you get paid so that you are not tempted to re-spend the money.

Post an SOA and be completely honest about your spending, then we can give you more suggestions. This will also show you how much surplus you have to pay off the overdrafts. But in the first instance I'd be looking at those eligibility checkers to see what's on offer.
http://www.stoozing.com/calculator/soa.php

Best of luck

fatbelly

Good links above.

The credit card trick is number 4 on this article

https://www.moneysavingexpert.com/banking/cut-overdraft-costs

FinancialThrowaway64

Thanks so much for all the great advice here, certainly calmed me down. Having completed the eligibility calculator it looks like I'm not eligible for the a money transfer card. However, it looks like I can get the Capital One Classic Complete card with 0% for the first four months. I feel this would be useful in terms of respite over the next few months as I clear my overdrafts?

fatbelly

If you don't already have a credit card then having one, and paying it off in full each month, will help would your credit history.

But you will have to be disciplined with this one, as it's only a 4-month 0% period, then it shoots up to 34.9%

Also you will only get a low credit limit of £200 to £1,500.

You'll need to look at whether anything else is harming your credit history, like whether you are on the electoral roll, and also look at whether you can do any of the other tricks in my last link.

Fatrab's soa calculator would give us more info if you want to fill it in and paste it here

System

Listen pay it off money. Take the hit on the interest. You are talking about respite and a break from overdrafts.

You earn a decent wage and seem to have relatively outgoings. I think from your posts seeing minus when you take money out may annoy you more than the actual debt.

Getting a credit card clearing that so your in positive isn't changing anything. It's just redirecting the debt. And what will happen is you will overspend. And you will find yourself with a credit card entering into the 5th month with interest and dipping into am overdraft.

It's how debt gets bigger. Debts don't get bigger with just interest they get bigger by people finding more credit.

Honestly can you not sit and live low for 4-5 months and clear the debt without further credit? If not why?

I'm not trying to be hard I'm just being honest that more borrowing very rarely leads to less debt.