Ways to stay out of your overdraft
If you constantly find yourself using your overdraft, follow the below steps to help prevent using it.
The problem with overdrafts is they are very easy to use, but once you use them, they are difficult to get back out of. If you are only occasionally using the overdraft, for example in emergencies and not receive charges for doing this, and also pay it back straight away you don't have a problem.
What the majority of people fail to realise is an overdraft is still classed as a debt. Generally there will be charges, fees and timescales associated with it. Eventually the debt must be repaid, and once you enter the overdraft you will usually get deeper and deeper into the red, based on the charges and fees, as well as additional spending. At this point it gets increasingly difficult to get yourself back out of the situation quickly.
If the above sounds familiar read on for 5 steps to ease the problems.
Track your spending
The first step is key to getting out of the overdraft, however you wont see immediate results. By tracking your money on a monthly basis you can see exactly where it is going. This in turn allows you to see where you can make cut backs - the bigger the reductions the quicker you will be out of the overdraft.
Make notes on all purchases during the month to see where your money goes. From this you can begin cutting out non-essentials from your monthly spend meaning that more money will be going towards paying off the overdraft.
Reduce the Costs
By regularly using your overdraft you are likely to be incurring charges. Very few overdraft facilities are available for free. This means that it is likely you will be incurring charges on a monthly basis for using the facility, which in turn means you will be forced further into the overdraft.
Due to the above situation it is worth shopping around to find an overdraft with a lower interest rate or charges, or alternatively you could transfer the balance to a 0% interest rate (on cash transfers) credit card.
Both options obviously need to be considered carefully. To transfer to a new overdraft you will need to set up a new bank account and transfer the current overdraft over. However the new account may only allow a small percentage of the overdraft to be transferred. It is important to check this prior to the switch taking place, at the same time check how long the interest free or lower interest rate lasts.
The same applies if you are transferring to an interest free credit card. The interest free period will only be for a limited time period, and if you have not cleared the balance by the end of this time, you will need to look to transfer to a new card.
To find out more about Debt Management call us today or complete our online enquiry form.
If you constantly find yourself using your overdraft, follow the below steps to help prevent using it.
The problem with overdrafts is they are very easy to use, but once you use them, they are difficult to get back out of. If you are only occasionally using the overdraft, for example in emergencies and not receive charges for doing this, and also pay it back straight away you don't have a problem.
What the majority of people fail to realise is an overdraft is still classed as a debt. Generally there will be charges, fees and timescales associated with it. Eventually the debt must be repaid, and once you enter the overdraft you will usually get deeper and deeper into the red, based on the charges and fees, as well as additional spending. At this point it gets increasingly difficult to get yourself back out of the situation quickly.
If the above sounds familiar read on for 5 steps to ease the problems.
Track your spending
The first step is key to getting out of the overdraft, however you wont see immediate results. By tracking your money on a monthly basis you can see exactly where it is going. This in turn allows you to see where you can make cut backs - the bigger the reductions the quicker you will be out of the overdraft.
Make notes on all purchases during the month to see where your money goes. From this you can begin cutting out non-essentials from your monthly spend meaning that more money will be going towards paying off the overdraft.
Reduce the Costs
By regularly using your overdraft you are likely to be incurring charges. Very few overdraft facilities are available for free. This means that it is likely you will be incurring charges on a monthly basis for using the facility, which in turn means you will be forced further into the overdraft.
Due to the above situation it is worth shopping around to find an overdraft with a lower interest rate or charges, or alternatively you could transfer the balance to a 0% interest rate (on cash transfers) credit card.
Both options obviously need to be considered carefully. To transfer to a new overdraft you will need to set up a new bank account and transfer the current overdraft over. However the new account may only allow a small percentage of the overdraft to be transferred. It is important to check this prior to the switch taking place, at the same time check how long the interest free or lower interest rate lasts.
The same applies if you are transferring to an interest free credit card. The interest free period will only be for a limited time period, and if you have not cleared the balance by the end of this time, you will need to look to transfer to a new card.
To find out more about Debt Management call us today or complete our online enquiry form.
