Singing Pig

Hi

I'm nearly up to £5,500 O/D with Natwest and just paid £70 the last month for the agreed overdraft interest.  They say this is 2.19% per month interest = 29.6% a year.  It seems pointless, as I'm not managing to reduce the O/D at all at this rate.  My bank was keen to offer me a loan to pay it off - but when they found that a) I was a contract worker and b) I still wanted to keep the O/D limit after the loan...they said no.

I just can't take the money out by putting it on my mortgage.  I've done that too many times. 

I got a leaflet through the post from my mortgage lender (Abbey National) offering me a loan (although, they might say 'no' once they find out that I'm working on a 7 month contract) and they were offering a 6.1% APR loan on amounts of £7,500 or over.  But I don't want that much - just enough to pay off my over-draft of £5.5K. Plus, to pay off even within the 5 year period they offer, would mean me paying off amounts monthly that are alot higher than £70 per quarter.  Yes, at least the amount I owe will be going down (ie. I'll be paying it off, rather than just paying interest on an O/D - but it's still works out at nearly double what I pay in interest with Natwest a month - Abbey National quoted £144 without protection a month for a loan of £7,500 when I'm only paying £70 a month for the O/D interest).

It's all gobbledeegook to me, I don't understand much of this, and frankly I glaze over once people go into this sort of thing.  Can anybody offer me some advice? and keep it really simple!!!!

Hi Gill,

If I were you, I'd transfer the debt onto the lowest possible interest rate with the option to pay it off as quickly as possible.  If you're able to get a personal loan at a cheaper rate than you're currently paying over a few years then this will at least get the loan paid off.  You could look to add it to your mortgage again, but you will need advice from a qualified mortgage adviser before you go down that route, and it sounds as if that hasn't worked for you before.

I must say, I'm surprised you don't want to cancel your overdraft once its paid off.  The lenders can probably see a repeated pattern of building up debts, consolidating and then using the same credit source again.  Is there any way you can accept the fact that you need to restrict your own access to credit to avoid putting yourself in this position again a little further down the line?

Gillg : Also recommend you read Rich Dad Poor Dad to really alter your perspective on life and start your financial education - then it won't be gobbledegook !

i saw a tv advert for directline loans for small amounts like you want -  but Rich Dad Poor Dad is a great read also !!

Hi gillg

   It may be worth visiting the web sites below as these sites hate Banks with a passion. They have lots of good info about how to get out of situations like yours.

http://www.moneysavingexpert.com/

http://www.fool.com/

 

P&K