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You might be able to deal with your overdraft by opening a basic bank account or switching to an interest free account.
Are you struggling to get out of your overdraft? It’s easy to find yourself in a vicious cycle where your wages clear your overdraft, but you end up back in it because you don’t have enough money left to cover everything in the month. That’s not to mention the interest and fees you’ll be charged if you spend most of the month in your overdraft.
If this is you then see whether our ideas can help you clear your overdraft once and for all.
Speak to your bank
In some cases, banks agree to waive interest and fees as a one off. It’s worth getting in touch with your bank, explaining your situation to them and asking them whether they’d be willing to do this.
Open a new account
If your wages go into your overdraft account each month, it might be a better idea to open a free basic bank account and have your wages paid into this instead. At the same time, you should get in touch with the bank that you have the overdraft account with – and let them know you’re having trouble repaying what you owe.
You’ll have more control over your money as it goes into the basic account and you’ll be able to pay off your overdraft in an affordable, steady way. And you won’t be tempted to go overdrawn again as basic bank accounts usually don’t offer overdrafts.
It may also be possible for you to change to a current account that offers an interest free overdraft. So your negative balance moves over to the new account but you stop paying interest on the amount, which might make it easier to manage.
If you don’t want to do this, make sure that you at least prioritise repaying the debt with the highest cost. This may well be your overdraft, so make sure you know what the interest rate and charges are so you can minimise the amount your debts will cost you overall. This might mean paying the minimum on other unsecured debts, like credit cards.
Budget or use savings
If you can, try to chip away at your overdraft each month, slowly but surely getting rid of the debt. You should draw up a budget so you know how much you can realistically put towards the debt each month and see whether cutting back in any other areas allows you to get it back under control.
If you have any savings, then it makes sense to put this towards your overdraft, as you’ll pay more in interest on the debt compared to the interest you earn on savings.
There’s always a way to beat debt
The important thing to remember when it comes to overdrafts, or any other kind of debt for that matter, is that there’s always a way to beat it. It might be a case of budgeting better or changing your account. Or it might be best to start a debt solution, in which case you should speak to a trained debt advisor. You can contact one of our friendly advisors for free using the options at the top of the page and they can talk you through the options for you.
by Christine WalshBack to blog home