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How do I pay off my overdraft?

Myself and husband have a £5k overdraft which we're really struggling to pay off. It's with a Halifax Current Account and we're charged £2 per day because it's over £2.5k. This is basically £60 a month. Trying to pay it off steadily just doesn't seem to be working. Is there a credit card/other account that would offer us a better option so we're not chucking away £800 a year on charges. (yes I know it wasn't the best thing to be that far in an overdraft in the first place)

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If you can get a 0% card that will allow cheque or credit transfers to bank accounts then that would be a good start. You are paying £730 per year in charges so to pay £200 (4%) to clear your overdraft with no interest to pay for over a year should head you in the right direction. That is £530 to put towards clearing your outstanding amount. If you have another credit card, clear that first after paying the minimum on the new card, but don't put any new spend on the new card or that will get charged interest. Set up a Direct Debit for the minimum on both cards to make sure that you don't miss a payment because the penalties are severe. Any spare cash then goes towards paying off that balance. Once the old card is clear, you will be interest free for any new spend as long as you settle the account in full each month, so change that Direct Debit to full settlement. Then any spare cash should go to clearing the 0% card. Once the 0% period is over you need to get another 0% card from a different provider. This time the transfer is only likely to cost 3% of whatever is left. Above all, work out a budget and stick to it. Cut out any unnecessary expenses. Don't take a holiday away until you are clear. Then you will be able to enjoy one. Mike



Thanks Mike, i've cleared other debt using 0% cards but always have found it difficult in the past to find a card that will allow money transfers. Is there a good comparsion site for this as it never seems to be listed. I have found an MBNA card with a 6.7% lifetime rate - I'm thinking this is a good deal but would appreciate your opinion.



The problem with credit cards generally is that the deals only apply if you are transferring from other providers. MBNA is the main problem because they issue so many different cards including the Virgin Card. There are plenty of 0% cards on the market so check on the comparison sites and look in the small print for who issue the cards and whether they allow transfer cheques or credit transfers to bank accounts. The lifetime cards are a good idea if you don't think that you can get a replacement 0% card when your new 0% deal expires. So as to help you get new credit card deals, formally close unwanted cards. You can usually reapply to the same provider a year after closing the previous one from that provider. Mike



According to http://www.mbna.co.uk/creditcards/mbnacards.html the lifetime transfer rate for the MBNA card applied to balance and money transfers, which implies you can use it to clear the overdraft and get the low rate. However, as Mike says, don't spend anything else on it!! Another option, if the MBNA loan isn't suitable, is to apply for a personal loan to pay back the o/d. This option relies on you being sure that you can make regular payments, but if you can get a loan on typical APR from Sainsbury's, Zopa, A&L or Abbey (Santander), the annual interest will be around £230, which is a third of what you're paying at the moment.



Hi Kerri gt I recently wrote an article on [url=/news/manage-your-finances/three-ways-to-get-rid-of-your-overdraft-for-good-4397.aspx]three ways to get rid of your overdraft for good [/url]which may be of use. However, both MikeGG1 and Swarbs have offered you some excellent advice. If you are looking for a money transfer, there are two lifetime balance transfer credit cards you could consider. The [url=/creditcards/linktracker.aspx?ref=1_Card_LifetimeBalanceTransfers_MBNAEuropeBank_MBNAEuropeBankMBNAPlatinumLowRateAmericanExpress_20100212_LoveMoney_DCMain_2_Text_Y_N&productid=CARDS001093&source=]MBNA Platinum Low Rate American Express Card[/url] is the one that offers the rate of 6.7%. This has no transfer fee. However, the rate is variable. The [url=/creditcards/linktracker.aspx?ref=1_Card_LifetimeBalanceTransfers_MBNAEuropeBank_MBNAEuropeBankMBNAPlatinumCreditCardVisa_20100212_LoveMoney_DCMain_1_Text_Y_N&productid=CARDS001065&source=]MBNA Platinum Credit Card Visa[/url] offers a lower rate of 5.9% and this is fixed for the lifetime of the balance/money transfer. However, there is a transfer fee of 4%. Hope this helps a bit Rachel



Thanks guys for your suggestion. I am leaning towards the MBNA cards (haven't quite decided which is best yet) rather than a loan as both myself and my husband have loans that are about to end and I'm soooo looking forward to not having that come out each month :-) Only problem I forsee is that my husband might not be accepted for the MBNA card as he's not had the best credit rating in the past. Will sit down with him and see though. Cheers!



A friend of mine has this exact problem, he lost his job with no savings and 1k overdraft at Halifax. Admittedly it is a little different to your situation but the principle is the same advice I gave to him can work for you: 1. Seek professional help [url=http://www.nationaldebtline.co.uk]www.nationaldebtline.co.uk[/url] is my fave. 2. If they do not work for you write to the bank explain the situation and ask them to freeze the interest payments until you can get back on your feet, there is always room to negotiate!! 3. If you are in a bind and the bank refuses point blank to help you, open another bank account, get your salary paid in there and write Halifax with the terms of payment you can afford and offer to pay by standing order monthly (not direct debit). This way if push comes to shove and you keep all letters of communication (Only communicate by mail) you can show the courts you tried all ways!! Regards, Den.



It may be obvious, but [i]really [/i]look around the house for stuff you could sell. Don't just look for valuable things, look at anything you might be able to sell on Ebay. Hold object-not-necessary-to-life-nor-a-thing-of-sentimental-value in one hand and a £1 coin in the other - which would you prefer? Every £1 you make is another step close to being out of debt. It isn't just the £1 you make in selling it, it's the interest on that £1 you won't be paying, and the wonderful decluttering effect!



Hi there, i will try answer your question: 1) every bank has a internal credit review facility 2) money transfers dont always work out well as if you are still left with monies to spend are fate always tempts you to use that 3) you should question that fact that you are being charged £2 per day for being within your overdraft facility, that seems like quite a harsh charge if you have been provided a overdraft generally if you are being charges then it may be that yu need to upgrade to a monthly charged service account for example if your rbs, natwest, barclays etc they have service accounts that qualify you for o/d facilities. now where i work customers think that talking to their bank means that the bank will just try take their money this is not the case talking to your bank is not harmful especially if you havent got monies to give, why because its in the banks interest to ensure that you pay the monies back as if you do not it means they default you account and loose the money you borrowed and have to go through the legal process to get something back which is not what the banks want. ok without further delay. it is in your interest to tell the bank that you want to reduce the overdraft facility to £300 and covert the rest in to a internally refiananced loan. now these loans are internal refianances so they do not take in to account your credit rating and your mst likely to pay less interest on this refiannace than you would in the charges and interest you accrue at the moment. how to do this? talk to the lending department of your bank, tell them you are strugling to find the monies to pay the o/d and want to refianance the o/d in to a loan. as this is monies you already owe the bank they wont say no to you because if your telling them that you want to pay the monies but cant pay the o/d they want you to stay banking with them which means they will go through you income expenses and then set the refiannace reduce you o/d and that will ensure that your credit rating starts to improve so long as you maintain your payments. all this information is my opinion from what i would do and is not advise any financial advies you require i would strongly suggest you seek advise from your banks moneysense advisors who are impartially trained advisors and independantly advise you without having any interest for the bank.



It seems that some sensible advice has been offered. In respose to creditreviewmanager.. you are right to question the validity of charging £2 a day for an overdraft. The same thing happened to me.. some time last year the Halifax announced that within 6WEEKS it was going to charge its customers £1 a day for an overdraft up to £1000 i think it was and £2 a day for amounts thereafter. As I had a £1000 overdraft and I'd been a customer for a while I contacted them to explain that I couldn't possibly find the £1000 to avoid the charges. Here's the best bit, the Halifax told me that it was an agreement following a review to 'help people reduce debt'. so i said okay then, how about you reduce my overdraft by £100 per month (which would still not be easy) and then charge me the fee in 12 months, or even 6 at a compromise. When i was told this was not possible, AND OFFERED A LOAN INSTEAD, I asked to make a complaint. The Halifax person, though polite, told me that this wouldn't make any difference. i did log a complaint and didn't hear anything. So, not only make any compliants procedure completely pointless, but proved that the very devices that are dressed up to 'reduce debt' are actually functioning to increase it. Obviously I am at fault for being in my overdraft in the first place, however my issue here is the amount of notice the Halifax gave its customers to avoid significant unexpected charges. And they got away with it! I also think the fact I was offered a loan is significant to this thread. Whilst getting a loan/card on a reasonate interest rate is a good idea if you are going to pay it/not spend on it, it can lead to increased debt, as theoretically you have more access to funds (credit) in any given month. whilst this is down to the individual, I know many people, including myself, for whom this has not helped. Several people have already said this, but if you do get a loan/card, really, remove the overdraft facility immediately and cut the card up! And if anyone has any bright ideas about stopping banks being able to do this, please do! Thank-you for reading my rant, burntfingers



I moved to Alliance and Leicester as they offered interest free overdrafts for a year, and they matched my previous overdraft once I sent a letter of confirmation from my previous bank. I don't know if they still do this offer, but it worth looking into. They are not the best bank in the world, but if it saves you £60 a month, it might be worth it for a year of interest free overdraft and then move on... Good luck...



I had a similar experience with Halifax, after banking with them for over twenty years I went in to complain about the new charges, all I got was the offer of a 25000 loan, needless to say I am considering my options to clear my o/ draft and move on. This forum has been most helpful. Thanks



I'm in a similar pickle with Halifax. I decided to break free by selecting to go to Santander when I saw their "prefered overdraft" current account that offered overdraft matching facilities upto £5k. With Halifax I have £3400 that, after the first few days of the month and the majority of the bills go out I am well over £2500 and into the £2 per day bracket. Thinking I was on the right track and looking forward to 12 months 0% overdraft I was dissapointed when I got a letter from Santander saying I'd been refused the facility. I decided to check my credit score on creditexpert and it gave me a high rating of 999! Called Santander as I had a few questions by now and was told that it was based on their internal credit rating and that they had reviewed the statement I had sent to prove my current o/d facility and basicly they didn't like the way that I managed my account. I placed a complaint to try and find more details but a few weeks later received a letter telling me that if I keep my santander current account running well for 8 months (including paying in £1000 per month) the would be happy to review my position. (By which point I'll only be able to have the remaining 4 months at the super smashing rate!) I feel like I'm stuck between a rock and a hard place where Halifax knew when they launched this new charge that people would be stuck in the system with no way out! Thanks for reading my rant, if anyone has recovered from a similar predicament I would be grateful to hear how you managed it.



I am in the same position. I have an overdraft with Halifax for £1200. I have another bank account on which I receive my salary. So I was thinking of not touching the Halifax account anymore and set up a standing order monthly, for example of £100 to repay my overdraft. and if they contact me, I could say to them that this is the only option that I have to repay the overdraft. Any advice on this ??