Overdraft

[river]

II graduated last year and have a student overdraft of �1600 which is currently overdrawn by �1400 the �200 will cover the cost of direct debits I have coming out on a monthly basis and so by the end of the month will be gone.

Ok so here is the problem - I received a letter from the bank last Thurs saying that they have reduced my overdraft to �1000 and so I will need to pay back the remaining �600 by Sept 1st. If I don't pay that back of course I will have to pay charges...fair enough. Based on my current financial situation and the fact I am still trying to recover from the financial burden of having fully funded uni myself I cannot afford a �600 lump sum on sept 1st. BUT I can afford to pay �300 by the 1st and then the remaining �300 by sept 25th.

So I called the bank....was told I had to speak to another department (in total I spoke to 6 different departments and people which were all of course premimum line phone numbers)

1st department - debt recovery who offer an overdraft manager for all graduates. They were very happy to help me out and said they would sort out the payment of �600 and when would I like to pay the whole of the overdraft off by ? I said I can now afford to pay off the full �1600 by the end of the year paying between �200 - �250 per month. They said the minimum term to pay it off was a year...strange but ok. So he talks to me a bit more about the option and then it comes about that in actual fact the 'overdraft manager' is nothing more than a dressed up personal loan...nice one! I then asked him to explain why I would want to pay 6% APR and take out a loan over a period of a year when I am currently paying 0%APR on the overdraft that I can afford to pay off in 4 months? Obviously he had no justification for it.....Speak to another department

SEVERAL DEPARTMENTS LATER...

Continued below...

[river]

Finally get through to someone explain the situation and the very helpful lady explains that they are unable to extend the overdraft by 24 days for the sake of �300 �policy��wonderful excuse! So as a major international bank cannot afford to wait 24 days for �300 and are only willing to offer me a personal loan at 6% APR which lets be honest doesn�t really leave me much choice�what are my options? Well the only other option is to go overdrawn and pay the unauthorised overdraft fee but obviously we wouldn�t recommend this�course they wouldn�t! She explains the fee would be �20 a month. So lets sum this up I can either pay �20 for being overdrawn for 24 days and pay my full overdraft off in 4 months OR I can take out a loan (she also tried to sell me a credit card) and pay it off in a year? She confirmed that was correct. So I said ok I�ll pay the �20 and as I have no other option and I�ll have an overdrawn account for 24 days end of. She then advises me that will affect my credit rating BUT as a result of being at uni I have pretty much had 3 years of overdraft fees so would another one really affect my credit rating?

I was contemplating getting a 0% interest credit card and paying that off but I was told yesterday you need a credit card before you get a 0% one which I don�t, is that true?
Please does anyone have any suggestions? Options? Recommendations?

Thanks

[Ethel]

You don't need a credit card to apply for a 0% one. But be aware that such transfers will probably incur a fee of around 3%.

Apply for one or two online - they can only say no.

Here is a summary of the best credit card deals on offer:

http://www.moneysavingexpert.com/cards/balance -transfer-credit-cards#fee

[river]

Thanks Ethel but if I apply for one online and get turned down for whatever reason will that affect my credit rating?

[Hammer]

Getting turned down doesn't affect your credit rating as such, but applying for lots of credit does. One or two applications shouldn't make much difference.

And an important point to remember, seeing as you are obviously responsible and careful with your finances, being overdrawn is not a negative on your credit history if it's within your agreed limit. Being in unauthorised overdraft is a negative, so bear this in mind before taking the 'do nothing' option.

Also, when they reduce your o/d to �1000, will you have to pay interest on the �600? If so, it will cost you more than �20 per month.

You might be better off taking their 6% loan and paying what's left of your �250-�300 either off your overdraft (if they charge interest) or into a savings account paying 6% or more (if they don't)