Use savings (if you’ve any). Having overdrafts and savings isn’t sensible. Think about it: a £1,000 overdraft at £20 a month equals £240 a year, but the same in easy access savings, after tax, earns a paltry £13 at best. So repay debt with savings and you’re £229 per £1,000 up each year. Once the overdraft’s paid off , you can save more freely. You may think: “But I’ll have no savings if the boiler packs up or the roof falls in.” True, but in an emergency, access the overdraft you’ve paid off again and you’ll be no worse off . To beat the fear of being without savings,
read
www.mse.me/
repaydebts. Poor
credit? Get 0% respite from bank
charges. The options above won’t help if your score’s poor, but there is one card that off ers 0% on spending until October even for those with a poor credit history. The
www.luma.
co.uk card accepts some with CCJs or defaults over a year old to get it. Now as this isn’t a debt shifting card, you have to play clever and be disciplined to take advantage of it for reducing overdrafts. The technique is you do your normal, budgeted, day-to-day spending on the card up to the credit limit, instead of from your bank account. This builds up the debt on the card, but allows your overdraft to be repaid by your income. Do ensure you can make monthly repayments to clear the card before the 0% ends though or the rate jumps to 34.9% representative APR.
“I got £1,560 in unfair bank charges back.” If you have an overdraft the nightmare scenario is exceeding your limits and getting stung with bank charges – these transaction fees can be £6 per day or up to £25 per transaction.
Please mention thewire when responding to adverts 85
Get it wrong and they can add up to £100s or £1,000s a year. Do everything you can to avoid them and communicate with the bank if there’s no solution. However, if you are or have been hit, do remember reports of the death of unfair bank charges reclaiming have been exaggerated. Admittedly now it’s mainly for those where charges put you into fi nancial hardship, yet some do get money back, Alice emailed me to say: “I sent your template... a day later the bank refunded £1,560. Thanks.” For full help and template letters on how to reclaim bank charges for free see
www.mse. me/bankcharges.
In dire straits? If the debts are all too much for you, it’s worth considering non-profi t debt help from agencies like
www.stepchange. org,
www.citizensadvice.org.uk, and www.
nationaldebtline.org. Don’t be scared to speak them, they’re there to help not to judge.
@MoneySavingExpert
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