How to get out an overdraft?

Debtoverit

What is the best way to tackle an overdraft? A loan or interest free transfer card are unfortunately not an option, but with income coming in and bills coming out of the account, aside from making the monthly fee payments I’m struggling to actually pay anything down. The bank won’t let me do it in instalments unless I pay an amount each month that I simply can’t afford. What other options do I have? How has anyone else found the easy way to tackle an overdraft. Thanks I’m advance for any help 

the_long_and_winding_road

Hi, I’m treating mine like a loan repayment and reducing the overdraft by £50 to £100 per month. Has to be in a £50 multiple. Whatever I can afford. But........my bank doesn’t  have an issue with this. Not at the moment anyway. I’ve not spoken or arranged with them, I’m just doing it. Santander. Have you asked your bank what they suggest/support they can offer so you can begin to tackle this (given that the higher % fees are coming in)? 

fatbelly

Martin has a lot of info here

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

but you may like to post a  statement of affairs (format for mse) and people will give tailored advice

https://www.lemonfool.co.uk/financecalculators/soa.php

Debtoverit

the_long_and_winding_road said:

Hi, I’m treating mine like a loan repayment and reducing the overdraft by £50 to £100 per month. Has to be in a £50 multiple. Whatever I can afford. But........my bank doesn’t  have an issue with this. Not at the moment anyway. I’ve not spoken or arranged with them, I’m just doing it. Santander. Have you asked your bank what they suggest/support they can offer so you can begin to tackle this (given that the higher % fees are coming in)? 

Thank you that’s really helpful, do you mean you call them up and ask them to lower the limit by £50 each month? I’m also with Santander. This sounds like it could definitely help as it takes away the unsureness as to what is new income and what is paid off. 

I’ve switched over to the choice account so the fees are capped at £20 (with a £10 account fee) but this is still cheaper than what the fees would be on the free account. 

At the moment it would be very difficult to make £50 payments (both me and my partner have one) however once I have cleared some other debts to be able to put the money I’ve freed up towards the overdraft. 

In terms of advice from them, I was told a payment plan could be set up for £166 a month, or pay £1 and risk the account being defaulted, which is the one route I do not want to go down. 

Debtoverit

fatbelly said:

but you may like to post a  statement of affairs (format for mse) and people will give tailored advice

Thank you, I have looked through Martins post previously, and found a lot of helpful advice in there, unfortunately I haven’t found the advice I am now looking for. 

And thank you for the SOA link, I have wondered where people have found these. How do I post it once completed? I know this might sound really silly 

sourcrates

Debtoverit said:

And thank you for the SOA link, I have wondered where people have found these. How do I post it once completed? I know this might sound really silly 

At the bottom it will say "format for MSE" then publish or post to your thread.

ryanm8655

Budget is what I did. Work out all income vs outgoings and anything spare comes off the overdraft. Set up another bank account, without an overdraft and transfer your budget to there so that you can’t overspend. Then reduce down your overdraft limit each month.

I used to live in mine, then one month the bank reduced it without warning by about £3k. Left me up the creek and worried about paying rent etc. So it’s dangerous to rely on them.

Debtoverit

ryanm8655 said:

Budget is what I did. Work out all income vs outgoings and anything spare comes off the overdraft. Set up another bank account, without an overdraft and transfer your budget to there so that you can’t overspend. Then reduce down your overdraft limit each month.

I used to live in mine, then one month the bank reduced it without warning by about £3k. Left me up the creek and worried about paying rent etc. So it’s dangerous to rely on them.

Thank you, and I’m really sorry to hear about what they did to you, I can’t imagine the worry you must have felt. I live in mine too, as does my partner, we are both £2000 in. 

 Would it be better to open a new bank account and get all bills paid out of there/income paid in so that they aren’t able to do this? What worries me about this is would they try and close the account if it wasn’t used? Leaving me up the creek so to speak as they would then want all the money back now 

ryanm8655

Debtoverit said:

ryanm8655 said:

Budget is what I did. Work out all income vs outgoings and anything spare comes off the overdraft. Set up another bank account, without an overdraft and transfer your budget to there so that you can’t overspend. Then reduce down your overdraft limit each month.

I used to live in mine, then one month the bank reduced it without warning by about £3k. Left me up the creek and worried about paying rent etc. So it’s dangerous to rely on them.

Thank you, and I’m really sorry to hear about what they did to you, I can’t imagine the worry you must have felt. I live in mine too, as does my partner, we are both £2000 in. 

 Would it be better to open a new bank account and get all bills paid out of there/income paid in so that they aren’t able to do this? What worries me about this is would they try and close the account if it wasn’t used? Leaving me up the creek so to speak as they would then want all the money back now 

Ultimately it was my fault, and they would’ve sent a letter about it but I didn’t open it. So completely my own fault. I was able to get through it and live within my smaller overdraft and didn’t have my true lightbulb moment for another couple of years. Just managed it by putting the debt on cards instead, which was dumb in hindsight but you live and learn!

Personally I’d do that and set up a direct debit to cover the interest plus some to clear it down. Also bear in mind the 40% interest rates are coming back soon...

Debtoverit

Ultimately it was my fault, and they would’ve sent a letter about it but I didn’t open it. So completely my own fault. I was able to get through it and live within my smaller overdraft and didn’t have my true lightbulb moment for another couple of years. Just managed it by putting the debt on cards instead, which was dumb in hindsight but you live and learn!

Personally I’d do that and set up a direct debit to cover the interest plus some to clear it down. Also bear in mind the 40% interest rates are coming back soon...

I’m glad you managed to get through it. Thank you I will look into it a bit more, see if I can find a different account to open. 

Luckily I won’t be stung by the 40% interest charges too badly as I switched to a paid account that caps my fees at £20, so £30 a month which is at least half of what I would have been charged, but still not fantastic. 

sourcrates

If your OD is becoming more of a problem, than just a minor irritation, then there are steps you can take yourself to get out of this situation.

Its pretty simple, and along the lines of whats been discussed above, you open a new, basic bank account, with a lender with whom you have no debt, then transfer all your income, outgoings etc over to this new account (do not use a switching service, as you have an open OD, do it manually yourself).

Your old account then just becomes another unsecured, non priority debt to deal with, your bank will simply close the account after a while, and it will be passed to a debt collector, or the internal collections dept of the bank, you can then choose to pay what you can afford to it, once defaulted, all interest will stop, the only negative effect will be on your credit file, so if thats important to you, then you need another approach.