I need advice on my overdraft

Eliasx

I have an HSBC advance account, since graduating university, had the account for a year interest free on the overdraft. Been looking for a job like crazy, travelling all over the place etc... thus why I have gone into the overdraft so much, I do have an income of £717.80 per month after tax my total outgoings are £411.61 (leaving £306.19 per month left over) the overdraft interest charge will be about £30 a month. Yesterday on the phone, they advised me to contact: hsbc.co.uk/help/money-worries/how-we-can-help/ after passing me through to several different people, I am also sceptical on what they have told me about paying the interest, they said I can only pay it with a positive balance which is strange because I have paid other things in the past with an overdraft like a credit card payment with the overdraft rather than having a positive balance so not even sure if what they told me is correct? Additionally before I call them, basically I don't think 100% the bank will have my best interests in mind, what can I say to them to work out a better way of paying this back? If I can only pay the interest back with a positive balance, its going to take me roughly 4 and a half months to the clear the overdraft once for all racking up about £140 in interest charges. What can I do here to make my life easier with paying back the over draft overall and is it true you can only pay interest back on an overdraft with a positive balance with HSBC and if so do they give you a monthly deadline like a credit card with the interest payments? Getting straightforward answers from HSBC is very improbable these days.  

Daliah

It is correct that overdrafts, and any interest on overdrafts, will only be paid once you have a positive account balance. This is the case at all banks.

Daliah

Have a read thru this: https://www.moneysavingexpert.com/banking/cut-overdraft-costs/

It will hopefully give you some pointers for dealing with your overdraft.

Eliasx

Thanks! But do they give you penalties and such if you don't pay the overdraft interest within said (one month period) month?

Daliah

The interest just adds to your overdraft, and you effectively pay interest in interest if you don‘t pay off your overdraft.

Try your utmost to get rid of this overdraft asap, snd avoid furthet overdrafts. They are one of the most expensive ways to borrow money. Stuff of the devil, actually.

Eliasx

Thanks for the advice, they wiped the interest completely for the foreseeable future, but mainly because I have severe mental health and actual disability. Was surprised by it lol. But yeah I think still wiping it off as soon as possible is still the best course of action.

Standingstrong

Read through what daliah has tagged above. 

I suggest wiping the OD off immediately so you don’t get into a downward spiral of debt. 

born_again

If they have wiped of the interest. The O/D will be closed down.

The normal way is as it's payed down, the limit drops to match the balance. 

But sound advice make sure that there are no more. Often going into a informal (unauthorised) O/D is cheaper than having one. Due to the charge limits.

eskbanker

born_again said:

Often going into a informal (unauthorised) O/D is cheaper than having one. Due to the charge limits.

Surely that's largely hypothetical, when many (most? all?) banks will decline transactions that would take the account into unarranged overdraft?  Just because there may be a cap on unarranged overdraft charges doesn't necessarily imply that there's any realistic way to run one up to reach that....