Overdrafts can be the perfect solution to those months when money is tighter than usual, when you have lots of events coming up or need a helping hand. But this fall back option can quickly become a bit of a honey trap and getting out of your overdraft can seem like an impossible task. Here are some simple steps to help you eradicate the overdraft for good…
The most logical place to start when you decide to fight back with your overdraft, is to set a weekly budget. Try to spend a small amount every month and begin to chip away until your overdraft is completely payed off. Sounds simple, right? But this can actually be really tough, and dipping into your overdraft can be just as tempting as ever when the money begins to stack up in your account.
Set up a spending diary to help you be strict and focused – in this diary should be a list of all of the bills and expenses that need to be accounted for, and get into the habit of writing down all of the things you have spent your money on. This may seem life a meticulous and monotonous task, but getting yourself into the right money saving mindset is half of the battle. Make sure that you’re honest about your spending, remember you’re only kidding yourself! Again, budgeting can be difficult and having a small amount of money to spend each month can make you feel as though you are slipping further into the red zone and dipping into your funds again. There are some other options that can help this…
Switch current accounts:
If the interest rate on your overdraft is sending your head into a spin, then it could be time to switch your current account over to a bank that can help. Try looking for ones that allow you to have an interest free overdraft – this way you have time and the reassurance that there will be no extra fees to take into account. Remember to do your research and be sure that this is the right decision for you – read the terms and conditions before you sign the dotted line, as this could lead to more hidden costs and overdraft.
Consider better credit cards:
Suggesting that you open new lines of credit may seem like a fools errand and poor advice when you are trying to clear yourself of debt, but a low-interest card is more of a short term solution (for example if you have 1 month to clear your overdraft before you have lots of excess fees) – 0% balance transfer credit cards can be a great buffer and add a lot more extra time to your debt, if you are eligible for a fixed interest fee credit card, that has 0% interest on balance transfers, this can provide you with the option of clearing your overdraft, whilst handling monthly repayments.
Clearing your overdraft really does depend on a number of different factors, for example, the time scale you have to pay it off, your spending habits (whether you’re a reckless spender or not) and whether you are happy to set yourself a small budget for an extended period of time.