For those of us with an overdraft, it is never more important to reduce what we have in there, if not get rid of it altogether. Bigger fees are on the way, but when on a tight budget, it can seem like an impossible task. But anything is possible. We took a look at how to clear your overdraft.
Create A Budget
First and foremost, you must determine how you will be able to live and survive.
Calculate how much money you have left over each month by looking at your incomings and outgoings.
As part of a sinking fund, consider birthdays, MOT and car servicing, and the expense of new glasses. Is there, however, anything you can trim from your budget?
The thing is, it won’t last forever. Debt will go, and it will do so considerably more quickly if you reduce your monthly expenses. When you’ve paid off your overdraft, there’s no reason you can’t start spending on extra luxuries. Making a few short-term concessions will assist speed up the process of getting your overdraft cleared.
How To Clear Your Overdraft – Forensically Monitor Your Spending
Spending on a daily basis can also have an impact. Keep a spending journal to see where your money is actually going.
You may believe you have your budget under control, but impulsive cash spending can rapidly undo all of your meticulous preparation. And, if you want to reduce your overdraft, whatever savings you make should go toward that, not towards random expenditures.
When you truly understand and are aware of where your money goes, you may be able to rein it in and save even more.
Lower Overdraft With Patience
It’s all about doing small things frequently. Your budget will show you how much you can pay off your overdraft debt, so reduce it as soon as you get paid. This will keep you from succumbing to the temptation to spend the money.
If you find yourself with extra cash for any reason, don’t buy [whatever it is that tempts you], instead put it in your bank. Reduce your overdraft limit by the same amount by going to your online banking or calling them. Don’t save money for a rainy day or just in case, because it will be spent on ordinary items and you won’t see it again.
Even better, when you check your monthly statements, you can see right away that you’re winning and that the overdraft amount is reducing in size.
How To Clear Your Overdraft – Use Savings.
If you have savings, it makes total sense to use it to pay off debt. And your overdraft is a good place to start.
Your savings account has a lower interest rate than the debt and charges you pay each month. If you don’t have any savings, try some easy ways to save money without even trying, and then put that money towards it.
Using an app like Chip, you can have money transferred from your bank every few weeks without feeling broke. It calculates how much you won’t miss using algorithms.
You may use the app while you’re in your overdraft, and you can set goals for yourself. Consider using an app like this to pay off your overdraft.
How To Clear Your Overdraft – Seek Advice
First and foremost, if you’re having financial difficulties, please contact your bank.
Increasing your overdraft won’t help you because you’ll merely end up in more debt. Instead, inquire about the possibility of a charge freeze or a reduction in the interest rate. It’s possible that they say no, which makes you feel defeated and unmotivated to try in the first place (I know how you feel). Shake it off, though.
Grab a cup of coffee, turn on some loud music, dance – whatever it takes to get rid of the feeling – then go on. Then get in touch with StepChange or Citizens Advice for assistance. There are several places where you may get completely free debt advice, and it is really beneficial.
Look For Refunds
If you believe your bank has overcharged you, you can request a refund (which you can use to pay off your overdraft).
Financial hardship, job loss, living in your overdraft all the time, unable to pay payments, unable to pay debt, and overdraft fees sapping your savings? Does any of this ring true for you? Directly with your bank is free, and you have nothing to lose by giving it a shot. You don’t have to hire a claims management business to do this, and it’s a simple phone call or letter that you can handle yourself.
If that does not work, simply consider switching accounts to get welcome offers and perhaps preferential rates.
