Get budgeting
Perhaps the most obvious way of fighting back against your overdraft is to start a budget, spend a little less each month, and start chipping away at your overdraft until you've wiped it out for good.
To do this, you should set up a spending diary as this will give you a good idea of exactly what you're spending where. All you need to do is get a small notebook, keep it in your bag/pocket for a week (or a month if possible), and note down everything you spend – however small.
Once you've got to grips with your spending habits, you need to make a list of all your outgoings and earnings. A great way to do this is to use a nifty tool such as this budget planner from the Money Advice Service. Simply enter your figures into the boxes provided and you'll see an instant snapshot of your household budget and personal balance sheet.
Make sure you're really honest when you're doing this, and don't leave anything out. One easy way to do this is to register for MoneyTrack right here at lovemoney.com. This will allow you to log into all your bank and credit card accounts at once, and see all your transactions at a glance. You can then categorise your transactions so you know exactly what you are spending your money on. This should then give you a good idea about whether your outgoings exceed your earnings – which, if you're regularly dipping into your overdraft, is very likely.
The next step you need to take is to see whether you can make any cutbacks anywhere - could you reduce how much you spend on your food bills or socialising, for example? Or why not shop around to see whether you can get a better deal on your gas and electricity tariff?
Once you've done that, you should hopefully have some extra cash leftover at the end of each month to put towards paying off your overdraft. Sounds pretty simple, doesn't it?
However, while some of you might find this is an effective way of tackling your overdraft, others may find it's a case of one step forward, two steps back – particularly if, even after making cutbacks, you don't have a significant sum of money leftover at the end of each month to throw at your overdraft. As a result, you could find yourself slipping further into the red.
So if you're still struggling with your overdraft, what else can you do?
Switch your current account
If you're being charged a ridiculously high interest rate on your overdraft, it could be time to switch to a new current account – preferably one which will allow you to use your overdraft interest-free.
However, the number of accounts offering free overdrafts has shrunk dramatically and the decent-sized ones generally only last for a year at most. For up-to-date information on which accounts do offer free overdrafts head to The current accounts that still offer a free overdraft. If a year isn't going to be long enough to pay off your debts, then you need to look at other options.
Get a better credit card
Suggesting that you take out more credit might not sound like the best solution to your debt problem. But in fact, taking out a credit card could help you to combat your overdraft.
That's because certain 0% balance transfer credit cards allow you to pay off your overdraft by transferring money from the card into your current account. This is known as a money transfer. What's more, you can get a 0% money transfer from several credit cards.
So this means that if you carry out a money transfer, you won't have to pay any interest on the debt for many months – giving you plenty of breathing space and time to start tackling your debt.
However, as always, there's a catch. And that's the fact that you'll need to pay a fee of 4% of the balance transferred. This means that if you paid off an overdraft of £2,500, for example, using a money transfer, the fee you'd have to pay would be £100.
You'll also need to ensure you pay off the balance you've transferred within that interest-free period. If you don't, once the period is up, you'll have to pay interest. For more on this type of card and the longest periods available now, read The best money transfer credit cards.
If you're really worried that you won't be able to pay off your debt in full by the time the interest-free period comes to an end, there is another option. And that's a lifetime balance transfer credit card. These credit cards promise to offer a low rate of interest for the life of your debt, and a few cards will once again allow you to include money transfers as part of the deal.