Can someone help me with this money matter please??

[Buffaloskull]

Hi all.

I just need a little bit of sensible advice on what to do about this. I'm unsure about what's best and need a place to work this out.

In april I have £300 coming my way out of a savings account, its money I "earned" through saving, so not actually the savings.
Its very rare I get a chunk of money like this that isnt wages.

I've been planning on getting a new carpet for my bedroom, the one up there right now isnt too bad, it's not great but not stained or anything, it was a cheap one and has been down almost 5 years now so I wanted it replaced with a new nicer one. So that's what I was going to do and have been looking forward to it.

But.

I currently have some debt. Small but still there and my sensible head is telling me to use the money to pay it off.

I have a £300 overdraft that I want cleared, I get charged monthly for using it AND I pay a £17 monthly fee for the account because it has "extras" on it but I dont use them anyway So I could pay off my overdraft and close this account which would save me money over time. (I'd probably SAVE £300 over a year by not paying overdraft and account fees)

I also have £450 on a BNPL plan, but that's not due until October so ages to pay it off, and obviously the £300 wouldn't pay it all off anyway, but a decent chunk and it would be one less thing to worry about.

Now I've typed that all down and it's out of my head, paying off the overdraft seems like the best option, I dont need it but I'm always IN it at the same time.

Or should I just be a little indulgent and get my carpet?? 😆

Based on info given, pay off overdraft. What capital do you have to earn £300? Couldn't some of that go towards carpet?

Yeah I could get one if I saved for a couple of months so it wouldn't really be a problem.
I think I just had it in my head that's what I was going to do with it, was looking forward to it then I thought. "Hmmm but theres smarter ways you could use this money"
So I'm going between being slightly disappointed but also knowing it's the best thing to do.

I don't know what you mean by "earned" not the savings.
I personally woukd pay off the o/d close that account and open a non fee paying one. assuming you don't use the "benefits"

You can’t afford a new carpet.

Can you definitely afford the £450 bnpl in October? I'd pay the overdraft off but keep the account open incase I need to dip into overdraft to help pay the bnpl

Cancel the 17 a month account in the first instance.

Pay off hte debt.

Use your savings for the carpet.

You're not going to get much carpet for £300.

The sensible thing to do is work out what's costing you the most in either charges or interest and pay that off first, use any savings from that per month, to overpay on the next debt, then when they are both paid off, use the money you've saved to save up for an new carpet.

Yeah it wont be a problem to pay the BNPL off, I wouldn't have got it in the first place if I couldnt afford it. Its interest free and I pay off £50+ pm.

Yes I think I'll pay off the overdraft, it's the best/most sensible thing to do.

Pay off debt

I've been planning on getting a new carpet for my bedroom, the one up there right now isnt too bad, it's not great but not stained or anything, it was a cheap one and has been down almost 5 years now so I wanted it replaced with a new nicer one.

And £300 will just get you another cheap carpet. Use this money to help your debt situation and save for a better carpet when you can.

Pay off the debt. You have £750 in debt, and getting a spare £300 is rare to you so it makes much more sense to pay off the debt first before spending extra on a carpet.

How long have you been paying for the account? We were missold an account like that with promises of only getting certain mortgage/loan rates if we took it, we never needed any of the 'extras' so did a complaint to get the monthly payments back and got it. Go back to your bank and get it changed to a lower fee account or free one.

This might be helpful.
www.moneysavingexpert.com/reclaim/reclaim-packaged-bank-accounts/

You WANT a new carpet, you don't NEED a new carpet.
Pay off your overdraft.

Is a new carpet that big a treat?

I’d put up with what I’ve got if it’s serviceable and not grubby, and put the money to better use. As someone says, you want a carpet, not need one.

Pay the overdraft, start putting the fees to one side, then get a carpet when you have the money.

A carpet would be way down on my list of things to buy if I had a £300 windfall though 😂

Is it the help to save bonus? We had ours in summer. Well done on saving enough for the bonus. It's hard work on limited means.

Definitely pay off the overdraft. They’re the worst kind of debt because you never sent like you’re making progress. Pay it off, close that account, switch to a different current account (choose one with a bonus for switching e.g. HSBC or First Direct www.moneysavingexpert.com/banking/compare-best-bank-accounts/), promise you won’t go into overdraft again on the new account and then when you get the switching bonus you can put that towards saving up for a better more lovely carpet.

Is it like a plum account savings money?

Anyways, yes pay off the debt cancel the account fee and the overdraft or reduce to 100.

Yes, pay off the overdraft and move to a free account. The interest on overdrafts is probably the most expensive mainstream credit available so should be avoided at all costs.

With the interest and fees for services you haven't used, you've literally thrown away the cost of a new carpet in the last two years. Sorry if that sounds harsh, but it's usually possible to make your money go a lot further just by being more mindful about how you use it.

For example, if you're a bit short and use your overdraft, it costs money. If you do this regularly, it costs a lot of money and you get into a cycle of being more and more short and losing more and more money on needless interest. It also flags up to your bank that you're short of money.

However, if you use a credit card instead, you can get a month or so of absolutely free credit, plus possibly a small amount of cashback on top, so if you put some of your normal spending (not extras, it's not free money, at the risk of stating the obvious) the effect is that you stay out of your overdraft because the money doesn't leave your account for a few weeks until the whole bill comes out of your current account by direct debit. Plus you get brownie points from the banks and credit card providers because this is seen as positive behaviour, not negative.

Sign up to the Moneysavingexpert weekly newsletter for a little reminder each week about what to do with your money and what not to do. It all adds up over time, even though each little saving might seem small.

Look after the pennies (don't pay £17 a month for a bank account you don't need) and the pounds look after themselves (after a couple of years you'll have saved the money for a new carpet just by not having a service you don't use anyway), in practice.

Pay off the overdraft, cancel the fee-paying account and put the £17+overdraft I interest saved into a new free instant cash savings account each month. It won't be long before you can buy a new carpet from that.

Thanks everyone, some really great advice here.

Yes it's a help to save account, and thanks yeah it wasn't easy to save. Single parent working as a carer on minimum wage, money is tight sometimes.. especially after last year 🙄

That's interesting @Scotmum83 I've had the account for about 10 years now 😱
Although the monthly fee was lower and I wasnt charged for using the overdraft back then.. I also used the mobile phone insurance a few times AND have used the breakdown cover twice that comes with it so I have used some benefits in that time.

I'm definitely going to clear the overdraft and cancel the account! I have a current account with them so I'll just switch everything over to that.. be a pain in the backside as I pay all my direct debits out of that one but once it's done it's done!

Sounds like a good plan OP. I would also suggest also immediately adding the £17 overdraft account fee to your £50 BNPL monthly payment - you won’t have time to miss the extra money if you do it as soon as you cancel your overdraft account. You mentioned The overdraft account probably cost you £300/year in both account fees (£17) and overdraft fees (presumably £8?), if you can, add the extra £8 as well.

This means you’ll be living on the same amount you are right now, but come October (or earlier!) with the BNPL paid off, you will have and extra £75/month and be debt free. It’s easy to fritter away the extra money you’ll save from closing the overdraft account, but don’t! Add it to the other debt payments and you’ll thank yourself when you are debt free and have the entire £75/month back in your control to spend/save as you want.