HSBC Bank Account - Overdraft

Richmc1983

Hi All.
I currently have a HSBC current account with a large overdraft and I honestly can't seem to be able to get out of it. I do not need the overdraft and would like to know the best way to try to slowly reduce it and stop using it.
Thanks in advance

redpete

I suggest the start point is to be honest, it doesn't make sense to say you don't need an overdraft and at the same time say you can't make inroads into it.
Every time you spend money think "Do I rally need this?".  Treat it as though you don't have the money (which you don't ,it's the bank's money).  Consider every £10 that you lower the overdraft by as a victory. Don't treat is as inevitable that the overdraft will stay the same. Don't accept any excuses for why you have to spend money but equally don't beat yourself up when you fail, think "I messed up there but I don't need to mess up tomorrow.".

jay1804

Great points above
To clear the overdraft faster you can:
- Cut back spending (Cancelling subscription you don't need, although it may be hard as were in lockdown)
- Sell things you don't need (Again lockdown makes it harder)
- Apply 'Covid-19' overdraft support  if you have already - most banks are giving 3 months at 0% interest.
- You could also try a money transfer credit card. 

Richmc1983

jay1804 said:

Great points above
To clear the overdraft faster you can:
- Cut back spending (Cancelling subscription you don't need, although it may be hard as were in lockdown)
- Sell things you don't need (Again lockdown makes it harder)
- Apply 'Covid-19' overdraft support  if you have already - most banks are giving 3 months at 0% interest.
- You could also try a money transfer credit card. 

This is a perfect way to transfer money to a credit card.

Thank you.

Richmc1983

Just checked my APR on the overdraft and its shocking. I have credit available as a fraction of the rate they are charging.
Am I best removing the overdraft or reducing?
Thanks

NigelFax

Hi, I also have an HSBC overdraft and with working from home this last year I have used what I would use in petrol to reduce it. Now got it from 3k down to £1.7k. And will just keep plugging away. Some months I only reduce by £50 quid. But I see it as a start. I am to get rid before the year is out 

redpete

Richmc1983 said:

jay1804 said:

Great points above
To clear the overdraft faster you can:

- You could also try a money transfer credit card. 

This is a perfect way to transfer money to a credit card.

What will you do when the low / zero interest period finishes?

redpete

Richmc1983 said:

Just checked my APR on the overdraft and its shocking. I have credit available as a fraction of the rate they are charging.
Am I best removing the overdraft or reducing?
Thanks

It's not either / or.  Moving the overdraft to something cheaper is good.  Reducing the amount you owe is good.

sourcrates

If you can`t move the debt to a cheaper rate, and it starts to create problems for you, you can always stop using the account, and make arrangements to repay the balance with the bank, on more favourable terms.

It then becomes just another unsecured debt to service, and you can move your everyday banking to another provider.

This will impact your credit file, it depends on your priorities really.