Advice Please!

mr.adamo

Hi everyone,

I am new around here, and just signed up for the forum now. I have had a look around but with so many users and so many topics and posts, I thought it would be easiest for me to post a fresh topic with my situation and see if anyone had any advice that may be useful for me. Anything would help..

I moved to the UK by myself from NZ in September of last year, nothing could prepare me for the cost of living over here, and in trying to survive, get myself a flat and get myself sorted I got myself into debt. My situation is not as bad as I'm sure many people's are, but I am on the brink of getting into trouble and getting some bad marks against my credit score - which I really want to avoid at all costs (or at minimal cost, rather!)

I have 2 loans, one is a £500 loan from a travel company that is almost paid off, the other is an overdraft with HSBC that has gotten out of control.

It started out as a £500 overdraft, with a low interest rate over 12 months. I ran into some trouble where I had some money due into my account, but due to HSBC's website being down, I couldn't check my balance to see if it had cleared. Now, where I am from informal overdrafts are not common thing, and I figured that if I made the purchase I needed to with my debit card on the internet - It's success would verify to me that the money had cleared. Obviously if it failed I would know that the funds had not cleared yet.

The purchase cleared, but I later found out that I had been given a temporary informal overdraft and had been charged heavily for it. Not long after I had some problems with my employer and ended up leaving. Unable to find another job around christmas time, I was forced to stretch this informal overdraft for a month or so to keep myself alive. I went £200 over the agreed limit, and when I phoned the bank after finding another job - I discovered that I had been charged an additional £250 in bank 'dishonour' fees. This took my total overdraft up to £950, where it was incurring more fees and interest.

I spent about an hour on the phone with HSBC, and they eventually told me they could freeze the overdraft limit at it's current amount of £950, so as not to incur more fees. They told me I had 3 months in which to organize overdraft reductions. After 3 months my progress would be reviewed and if it was evident that I had been making substantial reductions/payments each month, the time limit in which I had to clear the whole balance would be extended.

Now, I am in a basic, low paid job, and have been paying back another loan as well, on top of bills and living expenses. I have only been in my current job a short time and have only received one full paycheque since starting due to tax and other complications. At the end of this month, it will have been 3 months since the overdraft was frozen and I have not been able to make any reductions in it's size.

I have looked over my options and done a lot of reading on the main money saving web page, but I need some advice on what order to proceed in. I have never been much good with money, but this situation has greatly inspired me to take a hard look at my incomings, my outgoings, my cycle of debt and how to avoid falling victim to the greed of financial institutions.

As far as I can see from my research so far, the best option for me would be to open another account with another bank, get a 0% interest overdraft and use it pay off the HSBC overdraft in full. Then keep the HSBC account open and write to the bank reclaiming the exorbitant and criminal 'dishonour' fees, which are more than the actual amount exceeded.

I've applied for an 8.5% current account and a 0% overdraft with Alliance & Leicester, but have not heard back as to my success.

I need to know if it's possible that my credit score has been affected by my exceeding my overdraft with HSBC? They said to me that if I made payments within the specified time and continued to do so, it would not affect my credit score. My progress is to be reviewed at the end of this month at which time it will be known and taken into account that I have not been able to make any reductions in the overdraft.

Suffice to say at the time of writing this I have just under 2 weeks until my credit score is going to get marked for the worse.

Should I start enquiring at the bank now about reclaiming fees? What action is likely to be taken against me in the event that I am not able to get another loan/overdraft to clear the HSBC overdraft before the month is up?
I am afraid to talk to the bank, as they have been particularly unsympathetic and unhelpful with me in the past, especially regarding this issue.

What other options for loans might be available to me in the event that I get declined by Alliance & Leicester? I have heard that all credit requests are recorded on your credit score whether successful or not, and banks and other lenders will be less likely to grant you credit if they can see a whole string of credit applications in a short space of time. This makes me particularly frustrated as HSBC have tried to sell me a credit card on multiple occasions in the past, even though they were aware of my financial situation and it was more than likely I would be declined. I succumbed to their efforts on 2 occasions out of interest, and I fear now this will show on my record as 2 failed applications that I didn't even really want.

I have realized the mistakes I've made, even though many of them seemed unavoidable at the time, and want to get serious and responsible about my finances and my credit score.

As I said, I have 2 weeks until HSBC make a mess of my credit score and start charging me stupid amounts in fees and interest again. If this amount was at 0% over 12 months it would give me the chance to increase my income, decrease my outgoings and get on top of it.

If people here could take a look at my story, take a look at my finances and let me know if there are any specifically advisable courses of action I could take to save myself from going downhill here. I am pretty new to all this serious budgeting stuff, but I am determined to get on top of it, learn about how it all works and now let myself fall victim to the banks!

Many thanks,

Adam

beanielou

Hi Adam & welcome
You maybe need to think about opening a new basic bank account & then your OD becomes another creditor and youcan make an arrangement to pay it off.
Could you get an extra wee job meantime to help increase your income?

GeorgeUK

Not too sure but i think also some of the terminology may be confusing you too. (Maybe not)

I would suggest trying to see your credit score at Experian (free if you cancel within 30 days) and see what credit checks have been done against you.

Would it be possible for you to get a credit card?
Do you have any credit cards?
When people have a debt that they wish moved from one account to another, it is most often a Credit Card (CC) Balance Transfer (BT)

If you applied to Virgin for a CC which has a promotional rate of 0% APR (interest) for 15 months, the most you would need to pay towards this is a BT fee (usually around 3%) and 3% of the balance in the first month. Each month after that with Virgin is only £25, so hopefully you may be able to afford this repayment.

Do not buy anything with this card as you will be charged at a higher interest rate which kind of defeats the purpose.

Are you on the electoral roll where you live?
This can sometimes influence your credit score so thought i'd check.

mr.adamo

Hi guys,

Thanks for the response.

At present I don't have a credit card, to be honest I've always been a little wary of them as I've never been much good with money and have always feared I might get myself into deep water with one.

I have noticed that a credit card is the most commonly mentioned method of transferring debt and I suppose for that reason it is probably the best considering the interest rate etc. As mentioned, HSBC did ask me if I wanted to apply on a few occasions and once I went through with it, but was declined due to my OD being near the limit and not looking good.

Is a CC really a better option than a bank OD? Would it be better than a 0% OD with someone like Alliance & Leicester? (if they approve) What are the benefits here?

If what HSBC say is true, then my credit score is only lacking within their company, as I have only had credit with them and one other place (the latter being a loan I have not defaulted on and always paid) Would this mean I still have a chance in getting a CC with another company/bank?

What sort of process and criteria must you go through to get a CC? Right now I have no money, and I really need to get this credit asap. I have just realized that it is 3 months to the day since HSBC froze my OD and they are going to want answers now..! I am going to have to plead with them for an extension.

I would like to check my credit score, and the free 30 day trial sounds good, - I'm just a bit worried as to be honest the whole experience has left me a little paranoid and I'm worried I might get stung with surprise costs!

mr.adamo

Also - a quick and simple question, assuming that it can be answered.

I am going to have to call HSBC tomorrow, and ask them for a short extension on the freezing of my OD limit - to stop them charging more fees and putting a black mark on my credit score. As I said it has been 3 months to the day since I was given this deadline in which to reduce the temporary OD limit.

Does anyone know if they are more likely to behave differently depending on how I tell them I am going to pay it off? For instance, if I tell them I am to pay it off in full via external credit then they may not give me an extension, as this way they will not be able to charge as much (or any more) in fees, thus affecting their prime directive of profit first.

Perhaps if I ask them to extend the period, and refrain from marking my credit score, and tell them I am going to pay it off in installments, they will see an opportunity to charge more fees and accept it.

I hope I've made myself clear here, I just want to make sure I am doing everything I can do avoid getting my credit score damaged.

Thanks,

mr.adamo

EDIT! sorry, I just realized I have until the 18th of April to get this sorted, which is a huge huge relief. Either way I need to get onto it, so any info following my 2nd post here would be much appreciated.

Thanks,