I can't get out of my overdraft!

27 April2021

"I can't get out of my overdraft!" It's a common complaint these days, but what can you actually do about it? We've put together a few ideas that could help you out of the red - we hope you find them useful.

You could start by looking into these five areas.

Budgeting better

Successful money management starts with a good budget. So, figure out what's coming into your account every month and where it's going. Once you know where you stand, this can help you figure out an action plan - a way of getting the most out of any 'spare' money you have so you can see how long it'll take to pay off your overdraft debt completely.

The other great thing about budgeting is that it can really help you save money - see the next point for more on this.

Click here for an in-depth look at budgeting.

Saving money where possible

The more money you can save, the faster you can pay off your overdraft debt. It sounds obvious, but how do you go about it? This is where a budget is really useful - writing down where all your money goes every month will help you spot areas where you can cut back on spending. That could mean finding a cheaper energy supplier, finding cheaper ways to get about, identifying 'luxuries' you could do without, etc.

Click here for some more money-saving tips and information.

Looking at your whole financial situation

You might think of your overdraft as the problem, but is it really? It could be that you can't get out of your overdraft because you're forced to spend too much on other things every month.

If, for example, your payments to your unsecured debts in general are taking up a big chunk of your income every month, there may be something you could do about it:

Considering shifting your debt

Reducing the amount of interest your debts are accruing could go a long way towards solving your money worries.

Could you move any debts to an interest-free credit card? This could give you the opportunity to work on paying them off without watching the interest add a bit every month. Just bear in mind that this isn't likely to be an option unless you have a good credit rating.

Could you consolidate your debts with a loan? This could significantly reduce the interest you're paying. Again, bear in mind that your credit rating will have a major impact on the kind of loans you're offered - and the interest rate they come with.

Considering a new bank account

Is there a bank account out there that's better suited to you? If you chose your account because it pays a decent interest rate on the money in there, that's not really relevant if you're always in your overdraft. You might be better off looking for an account that charges as little as possible when you're overdrawn.

Looking further down the line, once you've managed to clear your overdraft, you could consider a bank account that doesn't offer an overdraft, so you can't accidentally spend more than you have in the bank.

You might be interested in the thinkbanking account, which would actually help you live within your means and make sure your bills are paid on time every month.

Note : the approach you take to your overdraft (and other debts) can have an impact on different things, like your credit rating, or the amount you pay back in total. If you'd like to get some advice on the pros and cons of different approaches, click here and fill in the form for a callback from one of our experts.

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