Overdraft Help

Matt_1998

Hello,

I recently received a notification from Santander, my bank, regarding the upcoming transition of my Graduate account to a 123 Current Account on the 15th of July. Currently, I find myself in a £2000 overdraft due to various financial obligations such as rent payments, cost of living, and a modest salary of £25K. Unfortunately, this situation has prevented me from saving, and I remain trapped in my overdraft.

My primary concern now is the potentially high-interest charges that may apply to my overdraft once the account conversion takes effect. To address this, I have explored options such as obtaining a 0% money transfer card and applying for loans to gradually pay off the £2000 overdraft over a 12-month period. Unfortunately, my applications were unsuccessful.

I would greatly appreciate any advice or suggestions from fellow forum members regarding this. If anyone has encountered a similar situation or has alternative solutions to propose, I would be immensely grateful for your insights.

Thanks in advance & please let me know if you need any further information. 

eskbanker

There's no magic silver bullet to address this issue, but there are some suggestions at https://www.moneysavingexpert.com/banking/cut-overdraft-costs/

You might wish to check your credit files too, to validate that the data there is accurate and to understand which aspects of your finances are likely to be of concern to prospective lenders:

https://www.moneysavingexpert.com/loans/check-free-credit-report/

However, if refinancing your debt to a cheaper alternative mechanism isn't viable then unfortunately that just leaves the traditional approaches of earning more and/or spending less - there's a debt-free wannabe board on here where you can share your statement of affairs (a summary of income and outgoings) to invite tailored suggestions of areas for improvement:

https://forums.moneysavingexpert.com/categories/debt-free-wannabe
https://www.lemonfool.co.uk/financecalculators/soa.php

grumbler

Matt_1998 said:

To address this, I have explored options such as obtaining a 0% money transfer card 

A card with 0% on purchases can be easier to get and with higher  limit and longer 0% term. Also you'll save on the transfer fee. Use it for normal spending and direct the 'saved' cash towards the overdraft.

boingy

Matt_1998 said:

Currently, I find myself in a £2000 overdraft due to various financial obligations such as rent payments, cost of living, and a modest salary of £25K. 

If these costs are responsible for your overdraft then you need to change something to stop the overdraft growing further. Otherwise you'll get a card or a loan and end up with two debts rather than one. I know, because I've been there. I was about 18 months into my first proper job before I could admit to myself that I was not living within my means. It took another two years to pay off the loan and the overdraft. 

Jami74

How much can you afford to pay off the overdraft each month? Guessing about £170 a month if you were considering a 12 month loan.

If you can move your everyday banking away from the account holding the overdraft, eg by opening a second account with the same bank or an account with another bank, then it is easier to treat the overdraft more like a loan that gets smaller every month rather than a flexible spending pot. 

Also, are you eligible for any of the bank switches that pay rewards? Eg, could you switch to First Direct for the £175 reward and £250 interest free overdraft? That is potentially £400 you could use to pay towards your current overdraft. Obviously you will need to make sure your finances are well controlled and that you are actually spending less each month than you are earning otherwise you'll find yourself with two overdrawn bank accounts that you cannot service.

pridehappy

Tesco Bank offered low credit score individuals a 13 month interest free balance transfer with a low fee. There’s also plenty of other ones out there.
https://www.tescobank.com/credit-cards/low-fee-balance-transfer-card/

Plus, have you checked Nationwide Building Society FlexDirect? If they we’re to offer you a large enough overdraft, switching to them would give you a completely free overdraft for 12 months. Make sure to check eligibility with anything though before applying.