How do I get out of my overdraft?

2 May2012

Many people find that having an overdraft facility on their bank account provides a handy way of borrowing a bit of extra money from time to time.

In the current climate, when huge numbers of people are finding that the cost of living is outstripping their monthly salary, having an overdraft to dip in and out of can offer some financial support.

However, as with all borrowing, there is a downside. Interest and charges can often build up quickly if you frequently go overdrawn and don't pay your balance off quickly. As a result, some people find they get 'stuck' in their overdraft - borrowing more money just to pay off what they borrowed last month, which could soon lead to their debts becoming a problem.

Furthermore, owing money is always something of a risk, as trying to repay what you owe at the same time as covering any other unplanned costs could stretch your budget to 'breaking point'.

If you're struggling with your debts, you could get some debt advice here. If you're looking to get out of your overdraft sooner, here are a few ideas that might help.

Tips for getting 'back in the black'

If you're having difficulty getting out of your overdraft, some of these tips could help you repay what you owe sooner rather than later.

  1. Do you have any savings you could use? If you have some money set aside for a rainy day, it could certainly be worth using it to pay off your overdraft - which could save you a decent amount of money in interest and get you out of debt faster.
  2. Are there any ways you could maximise your income in your spare time? If your monthly income is being squeezed by all your basic outgoings, and leaving you little money to pay off your overdraft, you may want to consider some ways of increasing your cash flow. You could tutor if you have skills people would pay to learn, sell some old memorabilia, walk the neighbour's dog or rent out your parking space to local residents.
  3. Consider cutting costs. The more money you have in your monthly budget, the more you could put towards your overdraft. There are all kinds of areas in your finances you could look at to rein in your spending, whether that means switching to cheaper brands at the supermarket or cutting back on non-essentials in general.
  4. Review your budget. Could you realistically move some money from one area to another in order to 'free up' some extra cash - like walking / cycling to work instead of taking the bus / car (if you live close enough)? You may even decide to do all that you can to live frugally for a few months, and use the money you save to clear your overdraft. It's all a case of what you feel will work best for you.

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Tags: overdraft, debt, living costs, poverty, interest charges, budgeting, savings

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