Living in overdraft + fees (Santander)

Alt115

I have a maxed out overdraft of £1477 that I am living in and have a monthly £39 interest fee (I have been paying this for two years now, with a another year paying £29 per month) that impact bills. Occasionally I get two lots of these in the same month which just happened today (£77). As it stands I am -£1,477 and -77.58. I feel trapped. I suffer from mental health and in receipt of ESA + PIP. 

I used the web chat to talk to the financial team on the Santander app today. The agent is refunding £38.94 as a one off good will gesture and put me on a payment plan for the remaining arrears. I will not be charged in July due to the double payment. Going forward though, I cannot realistically afford to keep paying the monthly £39 fee which will resume in August. I expressed this to the agent and he said I have two options (that can only happen once the arrears are paid off):

1. Temporarily hold the account known as 'Breathing Space' for a minimum of 30 days in which no interest will be charged while I examine options and speak to 3rd parties with how to proceed with the outstanding balance. 

2. Remove the overdraft that would place the entire account balance into arrears and set up a payment plan but would have severe impact on my credit file.

I have absolutely no idea on what the best course of action to take in my situation. I've also briefly been looking at claiming back previous charges if in financial hardship.

Any advice would be appreciated.

CliveOfIndia

I would suggest the first thing to do is pay no heed to any adverse markers that may or may not appear on your credit file.  Unless you're planning on taking out a mortgage or further credit in the next few years then it's of little consequence in the grand scheme of things - and it will already be in a less than ideal state anyway if you've been living off your overdraft for the last 2 years.

On a more practical note, begin by filling out an SOA : https://www.lemonfool.co.uk/financecalculators/soa.php

Select the "Format for MSE" option then copy and paste it into this thread.  This will allow others to get a realistic view of your income and expenditure, and suggest ways to deal with it.

Sometimes it's just a case of cutting back on non-essential items or switching to cheaper alternatives.  Other times a more drastic approach is needed.  But at least if you can complete the SOA you'll be able to see where you are, and get a clearer idea of what the realistic options are.

JadedAngel88

If it was me I'd open a basic bank account, not with Santander, and have my money paid into there. Move any bills you pay across manually. Then you can treat the overdraft like any other debt. 

It won't stop them charging you but if your money is paid into a different account you have access to it all still and hopefully you can work on a plan to pay off the overdraft.

Brie

JadedAngel88 said:

If it was me I'd open a basic bank account, not with Santander, and have my money paid into there. Move any bills you pay across manually. Then you can treat the overdraft like any other debt. 

It won't stop them charging you but if your money is paid into a different account you have access to it all still and hopefully you can work on a plan to pay off the overdraft.

Agree - and definitely don't use the switch service as your overdraft might go with you!

fyi - breathing space is for 60 days, not 30.  You can have it for longer if you are in a mental health crisis (with very active treatment) when it would be for the length of the crisis and then 60 days beyond that.  And it can only be applied for once a year.  

I suggest that once you do your SOA and get a few hints from here you hook up with a debt advice service (NationalDebtline, StepChange, CMA, CAP) and see what guidance they can give.  They may be able to help you arrange a DIY debt management plan or suggest a debt relief order or something else.  It's good to talk to someone else about this sort of thing especially if it is affecting your ability to function on a daily basis.

sourcrates

The posters above have given great advice, the best way to get out of an overdraft if its becoming a problem, is to just stop using that account, do as suggested above, open a new basic bank account for your everyday banking, and stop using your old one.

It just becomes another non priority debt to manage, write to the bank and tell them what you have done and why, ask them to close the account and default you.

If you don`t do that it may take them a while to do anything, and you really want the interest to stop ASAP.

Once this process has completed, the bank will most probably sell your debt, so pay attention to whoever writes to you, and you can set up an affordable payment plan.

Alt115

Thank you all for the replies, much appreciated.

Something that I did not realize is that this overdraft was from when I went to university and did a BSc course. It then transitioned into a postgraduate account and then to an everyday account. I actually went back to Uni to do an MA when it went to the everyday account and didn't think at the time to get it back to a student account. Do I stand any chance of having the interest I paid during that time to be refunded as I was a student or is that hopeless due to my error?

CliveOfIndia

Alt115 said:

Thank you all for the replies, much appreciated.

Something that I did not realize is that this overdraft was from when I went to university and did a BSc course. It then transitioned into a postgraduate account and then to an everyday account. I actually went back to Uni to do an MA when it went to the everyday account and didn't think at the time to get it back to a student account. Do I stand any chance of having the interest I paid during that time to be refunded as I was a student or is that hopeless due to my error?

I don't think you'll have much luck there, I'm afraid.  At that time you held a standard account which charged overdraft fees.  It's not the fact that you were a student at the time, as such - it's more that you had a standard bank account.  It's not like the bank have done anything wrong.

I mean, I guess you could ask them very nicely, and they might perhaps, possibly, maybe, give you a token goodwill gesture, just to keep you as a happy customer.  But the bottom line is that they've done absolutely nothing wrong in that respect, so I really wouldn't hold your breath.  And if by some chance they do decide they'd like to make a token gesture, it'll be just that - they won't be refunding all the interest you paid.