Overdraft Help!!!!!!

Deadinthered

can someone please help with getting out of an overdraft. I have a current account with Natwest and an overdraft limit of 4k. i have no credit cards and 1 loan which is with Tesco. i have now been in my overdraft for what seems like ages, i am now 3k into it and need help getting out into the black. any suggestions, apart from the obvious stop spending? should i be getting an extension on my loan and paying off the OD, what is the best way???

missile

You may want to read Martin's guide here> http://www.moneysavingexpert.com/loans/debt-help-plan

I am sure you will find many people to help on the Debt-free wannabee forum.

Scousebird_2

Overdrafts are primariily designed for short term borrowing (eg-periods of less than 12 months and should really not exceed what you have coming in as the limit if you can help it)

Should you of been living in your overdraft for more than 12 months, which appears to be the case here hazarding a guess...then consolodating that overdraft onto the loan may be a better option. If there is no other way out and chances are that you APR on a loan is going to be less than the interest you would be paying for the next x amount of months or even years, until you win the lotto or something.

Realistically, I would appoach Tesco (or any other financial institution who is prepared to offer the right loan for you) and look at moving the overdraft onto the loan. That was you can see all the repayments over a set amount of time, you won't be worrying about what interest is going to be taken from your current account each month and you're free to lower that overdraft down and live within your means again-at the same time as seeing that lovely CR next to your balance instead of DR!

Good luck with whatever you decide, hope this helps!

YorkshireBoy

Deadinthered wrote: »

I have a current account with Natwest and an overdraft limit of 4k...i have now been in my overdraft for what seems like ages, i am now 3k into it and need help getting out into the black.

NatWest's standard EAR is 19.41%, giving a monthly rate of 1.49%. Assuming your average balance is £2,500 (due to salary credit and spending profile through the month) you will be paying around £37.25 per month in debit interest charges.

It's clear from your post that your overdraft is not static, ie you say "it's now". Do you mean you have already had some success in reducing it, or is it increasing? If the former, well done...you're moving the right way. If the latter, then I'm not sure a loan or any other form of consolidation will help.

By way of an example, if you were to take out a loan for the whole £3,000 at 7.9% APR (a reasonable rate?) and repay at £37.25 per month, then we're talking 120 months...that 10 years!!!!!!!

If you can afford to pay more than £37.25 per month, then with your current debit interest charged each month you should be reducing the overdraft balance...is that the case, or is it static/increasing with each month that passes?

If the latter is true, then you really only have two choices...earn more and/or spend less.

CLAPTON

I'm afraid the obvious is often the best solution, decrease spending and increase income.
unless the OD APR is very high you will probably find a loan more expensive anyway.