Please help me sort out my debts :(

brokeassnigel

I am a student who has just finished and I have managed to get myself into a lil bit of debt.

I have:

Natwest student overdraft: £1600 which I have used £1550 of. (INTEREST FREE FOR ANOTHER YEAR)

Natwest current account overdraft: £2000 which I have used £1900 of. (NATWEST STANDARD INTEREST RATE - I THINK ITS VERY HIGH)

LLOYDS OVERDRAFT - £500 which I have used £500 of. (£200 was accumalated by bank charged as I went over the £500 limit).

NATWEST CREDIT CARD - £500 which I have pretty much maxed out.

I Have about £500 in cash and I am expecting another £700 which I am owed in a month or so.

Income - £130 a month paid into my bank account which gets spend on gym, phone bills and general living/petrol. Not much other living costs as moving back in with parents.

Have a job started in October, but am looking for temporary work until then.

I really need help as I have to pay interest on some of this! Is there a credit card I can transfer some of this to thats interest free or something along those lines? I have a fairly good credit rating..

Thanks for any help!

GeorgeUK

Not too sure that your credit rating will be good. If you got your credit score from one of the credit reference agencies, they don't take into account things like salary. That's why we don't advise paying to see what your score is - all companies will have different criteria.

Also you need to make sure that you are registered on the electoral roll wherever you will be living, so if you are still registered at your parents address that shouldn't be a problem - depending when you move back.

I suggest going for the Virgin money card if you do go for one. This allows you to do a balance transfer to a CC or current account so you could use the cash to pay off your overdrafts. Not many cards allow this sort of "super" balance transfer. I wouldn't try too many applications as this can damage your score too. Usually 3 in a 6 month period is ok.

poorandindenial

There are credit cards that do 0% for up to15 months (I just got a Virgin one) butif you do that then PLEASE only use it for balance transfers - never spend on the same card as you BT to (they pay off the 0% balance first leaving you racking up interest on the spends in the meantime)

Some also won't let you do a BT from a bank account (but some will). you may or may not get the credit limit you need though and if you then apply for more cards you will start to hammer your credit rating. It may be worth converting your overdraft into a loan. You have to be prepared to be knocked back though, you have a limited income, this makes you less attractive to creditors as they will worry that you are overstretching yourself debt wise. If you do get knocked back don't apply willy nilly for more debt.

If you go to moneysupermarket.com you will be able to put in your details and see what products might be available to you.

But all this is hypothetical - you need to know the overdraft interest rates before you do a thing otherwise you won't be able to make the right decision. For each debt we need to know the actual amount outstanding, the monthly repayments and the APRs. It is also useful if we can see exactly where the money you get paid goes (with reasonably accurate amounts) and we may be able to help you shave money off there too.

brokeassnigel

Hi guys, update on this.. the interest rate of the Natwest account which is about £2000 O.D is 19.4%. Everything else is interest free apart from the Natwest credit card which is pretty much paid off now due to selling some things.

I applied for a virgin credit card but they said they could not offer me one oh no! Are there any better companies? Also, I am a student but I selected self employed with annual income of £20,000 which wasn't far off the truth a while back but its very seasonal. Would it better to put student instead of this?

Thanks!

Poosmate

Hi Nigel,

I think for a start I would knock the gym on the head - I mean it's not an essential living expense and that money could be better spent paying off your 19.4% OD or go on real living expenses and stop you going overdrawn and incurring bank charges.

I think also I would use the £500 savings to pay off the Lloyds overdraft and close that account at least you won't be paying any more interest on it and won't be tempted to use the OD facility on it and it's one less account to worry about. Forget the interest free student OD for now but DON'T FORGET IT COMPLETELY!

At the moment you need to concentrate on creating an excellent credit rating so that the doors will be opening for you when you need to start paying interest on that £1500. You also need to close the door on the credit that's available to you (having vast amounts of credit available to you will go against you on credit scoring) so when you get the £700 that is owed to you pay it off the Natwest OD and ask them to reduce the credit limit. Even if you only pay off £500 reduce the available credit by that much otherwise there can be a temptation to dip into it. By doing this you will reduce the interest you are paying on it.

Also, I find that by paying off a credit card (as you've done with your Natwest one), the bank wakes up and thinks "oh I think we're losing this customer, let's offer them a deal to keep them". It may not be the case for you as your OD and CC are with the same bank. It's happened for me though which is great because I don't have to go through the rig marole of applying for new cards! Yay!

Don't apply for every card on the market, as has been mentioned, this will go against your credit score too. As you got knocked back for a 0% I would try for a low % life of balance credit card to help you out now and as you start work in October your debts should be easily manageable by then and you should be able to start going to the gym again.

Hope this helps

Poo

brokeassnigel

Hi poo! Thanks for your reply. My gym is £60 a month, very expensive I know! I have been given July for free though and I am cancelling after that. I need to use my phone a lot and had bills of over £100 every month so I have changed my tarrif, £5 more expensive but I shouldnt go over my line rental now of £40 now.

Apparently I can apply for a 'Graduate loan' which is interest free for 2 years from Natwest so I might do that?

Hopefully I will earn some other money over summer also, up to £1000 over July and August. (I organise nightclub events and am planning one in August).

Virgin rejected me, I was thinking of applying for capital one. Natwest told me on the phone that 'interest free balance tranfers' don't apply to current accounts, is that true?

Thanks!!