Over Draft Cycle

Hi guys

I hope you can help.

Firstly my credit profile isn’t great, secondly there’s no one who can lend me the money.

I’m stuck in a constant cycle of overdraft debt circa £2k. Pay goes in and I have to use it to live. Now with the changes in the fees it’s going to be even harder for me.

I’ve tried to get a credit card to cover it but no joy and I can’t get a loan from anywhere.

Do you think there is any point in me asking my bank to transfer it to a loan? And if so what’s the best way? Letter or branch etc?
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Replies

  • custardycustardy Forumite
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    Unlikely they will give a loan to pay a debt,in fact pretty much no chance.
    You need to hit this from a different angle.
    You need to cut outgoing/increase income. Sorry it sounds blunt but its the reality.
    I was where you are a few years ago due to health issues limiting my ability to work overtime and being a bit over committed financially

    plenty folks here will advise.
    Check out the threads on posting you income/outgoings.
    For me I sold a few things,cut back like mad and lived like a monk.
    Luckily for me my health improved allowing me to earn a bit more.
    A lesson learned and apart from mortgage my debt is negligible with no CC/loans or the like with some savings.

    I was actually looking at these changes. My current account would charge me circa £90 a month on a £2K OD right now :eek:
  • squigglebitsquigglebit Forumite
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    Yes I’m cutting back as best as I can to pay it. Yep mine is costing more than that which is why I’d love to just be able to shift it and pay it off that way as I could make a big chunk in to clearing it that way.

    Hey ho I’ll get there
  • sourcratessourcrates Forumite
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    If push comes to shove, then default on your overdraft.
    Open yourself a new basic bank account with no overdraft facility, obviously with a bank with whom you have no debt, transfer all your income/expenditure to your new account, and use that instead, it will learn you to live within your means for one thing.

    Your old account can then be treated as just another unsecured, non priority debt to service, write to your old bank asking them to freeze interest on the account, explain why you cannot pay it, if you come to an arrangement with them, you can then pay it off bit by bit, if you can`t, long term it will be closed and sold on, so then rinse and repeat.

    Obviously this would get you out of the constant debt spiral, but do nothing for your credit worthiness, you would need to decide your priorities.
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  • Willing2LearnWilling2Learn Forumite
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    If it were me, I would post up my Statement of Affairs (SOA) into this thread for advice, guidance and support. :)

    https://www.lemonfool.co.uk/financecalculators/soa.php
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  • TheAbleTheAble Forumite
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    It's not exactly the biggest debt in the world. If you really cut your expenses down to the bone I bet you could clear it in 6 months. Maybe try and get some overtime, a temporary second job etc.
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  • theoreticatheoretica Forumite
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    The first thing you need is to work out how much you can put towards paying this off each month. Getting a loan and then discovering you can't afford the payments would be worse than useless.
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
  • BizzywizardBizzywizard Forumite
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    Which bank are you with?

    I was with HSBC for years and switched banks about 8 months ago to Nationwide Flex direct. It offered me a 2k overdraft no interest for 1 year. The over draft will be gone by the 11 month, this year. This has given me breathing room. But I have been paying it down, which means having a tighter year.

    I also took out a second account with no overdraft with RBS so this has helped pay for my bills, mortgage etc. I have a written down a list of all of my direct debit bills, that come out of this account. So its always in credit.

    I pay into Nationwide my full salary, leave £200 ish to go towards my overdraft then the rest goes to RBS on a direct debit.

    Once the overdraft is cleared, close the Nationwide account. Then debt freedom in a year!

    I am now obsessed with checking each account every day! Before I rarely looked at my bank balance! I never want to be in an overdraft again.


    My way may help you. Good luck. Bizzy:j
  • GrazeleyGrazeley Forumite
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    The only way I got out of my overdraft (£1500 i think it was) was to open a new basic bank account with a different bank, have my salary paid into it and they transfered all my Direct debits over to be paid from there. I was then able to use the small surplus each month to gradually pay back my overdraft until it was 0 and then closed the bank account.
  • enthusiasticsaverenthusiasticsaver Forumite, Ambassador
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    If your credit profile is not good you will not get any 0% deal which is the only way I would recommend moving the overdraft. A loan or another credit card is definitely not the answer. If you can cut down enough to reduce the overdraft month on month then do that or move bank accounts if you can but cutting back on spending or defaulting and doing a DMP if things are so tight you can't cut back further.

    A £2k overdraft is not huge and the new charges don't come in until April. Cut back as far as possible to reduce the overdraft over the next 2 months.
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  • edited 3 February 2020 at 8:32AM
    willstewartwillstewart Forumite
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    edited 3 February 2020 at 8:32AM
    Grazeley wrote: »
    The only way I got out of my overdraft (£1500 i think it was) was to open a new basic bank account with a different bank, have my salary paid into it and they transfered all my Direct debits over to be paid from there. I was then able to use the small surplus each month to gradually pay back my overdraft until it was 0 and then closed the bank account.

    Does that not work out to be a little bit more expensive?
    Surely an amount that reduces that to a minimum for part of each month is better overall than a few £ or so here and there against the full £1500?

    I'm about £1300 into mine at present and that is costing £2.02 a day at present, increasing as I spend.
    Trying to reduce it by £100 minimum a month.
    Had it way too long and when it's costing me £60-£100/month (not sure about April when the charges change, but I bet I'm in the 10% that ends up paying double for it!). Used to pay £20-£30/month, but after the last set of changes, that practically doubled, and it's money that could be effectively used elsewhere.

    The thing that bothers me is that for every £100 I reduce it by, I save something like £2/month.
    At least it will be nice to see a positive balance for the first time in ages once it's paid off.
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