Category: Overdrafts

Overdrafts

Tips for Reducing your Overdraft Burden

An overdraft can be a useful thing to have. If you need money quickly and do not have enough, then dipping into the overdraft can keep you going until you get paid. It is a feature of many current accounts and a lot of people use them. Some people get overdrawn rarely and enjoy having the facility as a backup just in case they need it. Others go overdrawn more regularly and use it as a way to keep them going if they run out of money before pay day. There are some people though, that really struggle to keep on top of their overdraft and in this case it can be a problem.

If you spend more money than is available in your current account then you will go overdrawn. You may have arranged an overdraft with the bank and they will allow you to go overdrawn up to a certain limit for a specific charge. This will normally be an interest charged daily. If you borrow more money than the agreed amount or borrow money when you have not arranged an overdraft at all, then you will be charged more money. Some people find that they get overdrawn a lot and they find it harder and harder to pay it back.

If this is the case, then it is good to work on ways to reduce the amount that you are using your overdraft facility. It is wise to think about how you can ensure that you do not spend so much money from that current account so that you do not have to borrow money from there so often. An overdraft is an expensive way to borrow money and so it is worth thinking about alternatives.

Some people use a credit card rather than an overdraft. You can set up the credit card so that the outstanding balance is paid off each month when you get paid and then you will not get charged for using it. It is a great way to buy things and pay later without having to pay for the privilege. Even if you do not pay it all off to start with, it can still be a cheaper option than an overdraft as long as you do not leave the debt outstanding for too long. There may also be other sorts of borrowing which could be cheaper as well – it is always worth doing some research to find out as you could save yourself some money.

It is also worth thinking about your spending and whether you can find cheaper alternatives to the things that you are buying or cut down in the amount that you buy. If you note down what you buy and look at the prices, it could help you. Think about whether you could change providers, retailers or brands so that you can still buy the same things without paying so much. You could also consider buying less things so that you do not keep spending more than you earn.
If you do not want to cut down your spending or do not think that you can, then you will need another way to make sure that you do not keep getting overdrawn. The solution would be to increase your income or to inject a lump sum of money so that you can pay it off and then get back on your feet. It could be possible for you to achieve either or both of these.

Getting a lump sum of money could be achieved by selling things that you own and getting some money from them or doing some temporary work to earn a bit of extra money. Selling things is probably the easiest and you will be amazed how much people will pay for things. Take a look at various places that you can sell things, such as social media pages, classifieds, auction sites and even local sales. You will need to select the right sort of place depending on the types of items that you are selling. Temporary work could be done by doing some temping through an agency or by finding some freelance work online.

If you want a more long term income then you could consider starting a business or doing more regular freelance work. You could do an extra bit each week and it could add up to really helping you to get the overdraft paid off and stop it from coming back.