21 Jun 2015

A question about : Best way to sort overdraft?

Hi,

Sorry if this is in the wrong place!

I currently have an overdraft on my Halifax account of 1600. My monthly wages aren't this much meaning I'm never in credit so can't reduce it bit by bit. I get charged Ј1 per day so charges of 30ish pounds per month.
I've read a few posts about people opening up a basic bank account and having wages paid into the new one, so I guess my question is if I did this would I have to take the overdraft with me, or would I just pay it off monthly and treat it as another debt? I'm starting a self managed DMP as of Wednesday and am trying to juggle as much as I can to get the best deal. I do have the option of paying off the overdraft with a credit card, but the APR is 29% so can't work out if that's cheaper or not.

Thanks in advance title=Smile

Best answers:

  • Transfer all your business to your new account, the OD stays where it is, and you just treat it as another debt.
    Well done for going self managed, it's not hard to do, and gives you the advantage of keeping control.
  • If you are paying Ј1 per day on the overdraft of Ј1600 that is 22.8% so that is cheaper than 29% so certainly not worth transferring to credit card. Can you get a 0% card or is your credit rating not good? The only other way you could get rid of the overdraft is to gradually reduce it each month so if you intend to pay Ј100 per month (plus bank charges) then you reduce it to Ј1500 then Ј1400 and so on.
  • You should treat your overdraft as a debt. Have you thought about doing an SOA and seeing where you can cut back to pay off your debts faster?
  • With my overdraft, I never made inroads into it until I got a bank account elsewhere without an OD and treating it as another debt. It went on my DMP, and got a portion of my monthly payment until it was the only remaining debt, then I just blasted it as fast as I could
Category: 
Debt-Free Wannabe
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