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How to clear my overdraft(8 Posts)
I've been a bit head in the sand over Christmas and have managed to run up a £700 overdraft on my current account.
I know it's not much but I'm not working until my youngest is at school.
What is the best way of clearing this? Is there a loan or credit card or bank transfer I can do?
My basic plan is to reopen an old bank account for everyday use and leave the overdraft as a debt that I pay off a bit a month. Is this the easiest way?
I wouldn’t abandon the account as they might close it and pursue you for the debt. Is it an authorised overdraft, or are you paying a tonne of fees/charges every month?
If it’s unauthorised, you will need to ask the bank to stop applying charges and agree to pay it back. There is a high chance they will want to close the account.
If it’s an arranged I’d, do you know how much you can afford every month? When I paid off my OD I asked the bank to reduce the limit by £100 every month, as I recall I had to call up and do this every month. It meant I paid it back, resisted the temptation to spend again and paid it off pretty quickly.
Your going to have to treat it as a bill.
Make sure your authorised with the bank as not to add big charges, then decide from your incomings what you can afford to pay. It wont go away and will get worse if you ignore it.
You could get a 0% credit card with money transfer (check this is 0% as the offer is often just on purchases or transfers to other credit cards) and use that to pay it off and then pay off the cc. However, only do this if you are very good at not spending anything else on the card. Otherwise your debt will spiral. We cut up the actual card and just paid off the balance online monthly so there was no temptation to spend on it.
What income do you have and what is it on a weekly bases?
You’ could continue to have all your income paid into this account but reduce your spending each week by £10, so over an average month you’d see your overdraft reduce by £43.33
Go into the no spend February thread and challenge yourself for a thrifty month
Search out good recipes for cooking cheap meals that’ll stretch the week or cook 5 nights more than you need and freeze half for the last week of the months so you don’t have to shop
Don't get yourself in more debt trying to clear this debt. It's so easy to spiral.
Take a look at your outgoings and see if there are any things you could downsize on, expensive phone contracts, unused gym membership etc or switching utilities to pay it down a bit each month. When you've done you can then reap the benefits of fewer outgoings.
Are you being charged to to use the overdraft? Calling the bank may help if you can explain you are struggling
Do you pay your council tax over 10 months op?
Treat it as a bill and budget what you can towards it every week or month. Ask Bank to reduce the limit as you pay it off.