how do you break the overdraft chain ?

Question

my overdraft is getting out of control, i dont tend to spend much, my cash goes on bills and food.
but my over draft has gone up by £1500 since the begining of the year, does not matter what i do i just cant seem to bring it down, the bank, who i have been with for 20yrs would gladly lend me the cash to pay it off, however their rates arnt the best and i dont really want to get into the situation where i am paying them more money for years to come to pay for something that they readily gave me, beginning to think that banks engineer dept to make more money out of you,

any ideas ??

Answer 1

Looks like folks have suggested some good ideas about budgeting and planning and cutting your spending on outings short, etc. The main point here is the fact that an overdraft is considered one of the highest possible interest-bearing instruments out there. In my country, for example, it runs at the rate of at least 21%. To use it, you also have to pay fees or a set monthly fee. So, you are right in assuming the banks engineered this particular product. All things being equal - it is the best possible money making machine for them after a regular current/transcaction/chequing account.
1st, you must find out what the overall annual interest rate on this overdraft is.
2nd, you must fund out how often it compounds, or interest grows on interest. Don't be surprised if it rolls/recalcualtes EVERY month, but accrues DAILY!. That's right - daily! That's where you are pretty much stuck after reaching a certain balance and thinking that "oh, well, I shall just pay interest this month again". ...Only to notice, that next month, your principal not only stayed the same, it actually increase more - so now you have to pay more interest on that one...
3. Compare the interest rate on the overdraft (o/d) to any "lowest-rate possible" loan. No matter what others say about payments, fixed amounts, terms - forget it! Mathematically, it is still 5%<21%!
4. Find out the TERMS of the loan, namely one simple thing - can it be paid at any time and can you deposit/pay into this loan over and above the set amount at any time. In 9 out of 10 cases, loans allow this, that is they are fully "open" in their terms.
5. Take the loan and figure out your budget for this loan payment

There is no way around it other than stopping payments on overdraft at which point the banks will send you to the credit bureau and riun your credit bureau. A lot of times, they won't really "collect" on your in a hardest sense of this word, but the message on CB will haunt you in the future and will prevent any other effective borrowing when time comes...Think about it from that angle.

Hope that helps
4.

Answer 2

DO NOT get a loan to cover it - if you do that you just have to make payments against the loan which it sounds like you can't afford anyway.

Sit down and seriously review your budget - see if there is something that you could cut down on or cut our completely for say 6 months to reduce your outgoings. I know you say you don't spend much but there is often something that you could go without. If there isn't, don't panic there are other things that you can do.

Firstly, if you have a credit card, cut it up NOW! No ifs and buts. JUST DO IT!

When my husband and I got into debt (when the IT market crashed and put us both out of work for 2 years) I took three menial jobs to help us through. NOW I WOULD NOT RECOMMEND THIS! Three jobs is way too much and damn near killed me, but two jobas is doable so start looking for saturday jobs or evening jobs that you could do that wouldn't interfere with your main income. You only need to make £250 a month extra to pay off this overdraft in 6 months so you don't have to work all the hours gods sends, and if you are happy to let the debt be paid off over a longer period you don't have to push so hard.

HOWEVER, it is really easy, with extra money coming in, to decide to just give yourself a little treat everynow and again and get into the habit of spending so you need to be very disciplined until the money is clear. The best way to think of it, it to allow yourself a treat budget - so that you can have the occasional nice thing but aren't tempted to blow it all in a fit of madness. To completely ban treats is foolish, particularly if you do go for a second job as you will need something to unwind!

Oops - I forgot to mention. If all else fails and you are really desperate, go and see the citizens advice beaureu (haven't spelt that right but spell check is not working at the moment for some reason). They are very helpful and will go through things with you in far more detail than I can on here.

Anyway, this amount of money IS do-able. And once it is paid off you need to start thinking about the future so you don't srift back into debt. Is you boss open to giving you a small pay rise? Do you have an idea for generating some money outside work, for example selling on ebay etc?

Good luck and I'm sure you will get past this

Answer 3

The only way probably is a loan to cover it. Either that or if you can manage to pay off some each month and just look at it as a long-term project so by maybe this time next year you'll have paid it and be debt free!

Good luck to you x

Answer 4

Get two jobs. That's what I would do (and have done).

Stop spending more money have.
Don't use your debit card to make purchases; only use cash. This makes it less likely that you will lose track of your balance.

Make a financial plan that has EVERYTHING on it, even gas and drinking money. Be realistic, and live by this budget.

If all else fails, get three jobs. After about two months of working 100 hours per week, you will start to learn some financial discipline, I assure you.

;-)

Answer 5

What kinds of skills do you have that folk may be prepared to pay you for? you have a pc. Do you have writing skills? are you able to write CV's for others for a fee, for occasion? Do be careful once you marketplace your self, nonetheless; there are various misspellings and grammatical blunders on your question above and that fairly won't do while you try to get writing jobs! As component of your activity seek, have you ever seen volunteering for a precious corporation? that would desire to help because of the fact this is going to widen your community of contacts. It additionally might help furnish you with some attitude; whilst you're residing hand to mouth actual now, there are people who can not discover the money for to circulate to college, who have not got a pc or electricity and who've not something of their cabinets. often times I ought to offer myself that type of wakeup call to deliver me back to the actual international.

Answer 6

i was in the same situation couple of yrs ago and the only way out was to search around for the lowest interest loan,pay off all your debts so you only have one bill and definately cut up your credit cards, its hard to do but worth it eventually. good luck

Answer 7

"Easy" (not really)

Stop spending and sell. You should be able to find somebody that can help you with that. Many cities have debt managers that help people 'control' their 'minus-money'. Does hurt your pride to ask but will save you loads of money.

Answer 8

do you owe 1500 in overdrafts or do they charge you that for overdraft protection.
If you owe 1500, then you DO spend too much.
If they charge that much, you're being screwed!