advice please

zoelouise88

hi all after abit of advice my oh owes £1500 on his overdraft he went and spoke to the bank to reduce his debt, he asked for a freeze to be put on the account until he has paid it in full but the assitant told him he would be better of getting a loan to pay the od then pay back the loan monthly.
is this really the best thing for him to do?? i told him not to as i really dont like the thought of having a loan. but was wondering what you lot thought.

thanks

CLAPTON

is the OD his only debt?

what do you mean 'put a freeze ' on the a/c... why not just stop using it and repay a little each month

whether a loan is a good idea rather depends upon the APR of the loan and the APR of his OD and how much he can repay each month

Rafter

Your OH really needs a budget to make sure the OD is paid off over a realistic timeframe.

One option might be to set up a new 'basic' bank account without an overdraft and work out what direct debits and payments are going out of the main account, plus the amount of overdraft you want to pay off each month and then transfer the balance to the basic account and then you know exactly how much you have left to spend each month.

So if your OH has a salary of £1000, regular payments of £500 per month for rent, bills etc and wants to pay £100 off the overdraft each month, then transfer £400 to the basic account and make sure that is all you spend.

queen_of_leon

what about a 0% interest credit card? virgin are offering 15 months int free...could he clear it £100 per month?

(actually, according to martin you need to pay it off in 14 month to avoid last months interest being charged...and don't forget the 3% bal transfer fee which is included in your first monthly payment along with your £100+)

Scousebird_2

Depends if the APR is going to be less than what is charged on the O/D and whether the term of the loan is going to be longer that the time it would take to clear the overdraft on your own. If you can clear the o/d within the year then it may not be worth it-you have to look at the whole picture before signing for any loan.