If you’re deep into your overdraft and don’t have any savings available, here are some actions you may want to consider.
Have you planned a budget? If not, now could be a good time to create one.
A budget lets you see where you’re spending money each month and if there’s anywhere you could cut back. Our budget planner can help you see where you’re spending your money and where you could potentially make changes.
It helps to split your budget into ‘needs’ and ‘wants’. Needs are essentials, like rent and groceries. Wants might include eating out and holidays. If possible, start by reducing your wants wherever you can.
Pay particular attention to your Direct Debits to check they’re correct. There may be services or subscriptions you’re paying for that you no longer use, or could pay less for.
Any money you’re able to free up can help reduce how much you’re relying on your overdraft. You may be able to put this money towards reducing the amount you’re overdrawn.
Unlike personal loans and credit cards, there are no set repayment dates for overdrafts. This can make it tricky to prioritise paying it off. But it’s important to get into the habit of chipping away at the amount you owe.
Try to set yourself a target of how much you'd like to pay off each month and then treat it like any other bill. Factor it into your budget so the money is accounted for and you’re not tempted to spend it on other things.
A personal loan may give you a lower rate of interest than an overdraft. So, if you don’t think you’ll be able to repay your overdraft in the short term, you may want to consider taking out a personal loan to repay your overdraft. You’ll then be able to repay the loan in a more structured way – with set repayment amounts and dates – over a longer time period.
If you’re considering a personal loan, it’s essential to check the maximum APR you could be charged. This will help you understand how much interest you'll have to pay, so you can compare it with how much you’re being charged on your overdraft.
Explore: Loans explained: everything you need to know
Another option is a money transfer credit card with a 0% interest period. This type of credit card lets you transfer money into your bank account (typically for a fee), which you could use to cover your overdraft.
You’ll then be able to repay the money you owe without incurring overdraft interest. If you do this, it’s a good idea to consider whether you now need your full overdraft limit or whether you can reduce it.
You’ll need to make sure you can afford, at least, the minimum repayments before you apply for a credit card. It’s also essential to check the APR, as you’ll be charged interest if you still owe money once the 0% interest period comes to an end.
To help resist temptation, you may want to reduce your overdraft limit as you work your way out of it. This could help you avoid going back into it once the debt is cleared.
If you feel like your overdraft is unmanageable, you may want to speak to a trusted family member or friend. They may be able to help reduce any stress you have, and help you find the support you need.
Professional advice is also available.
If you’re an HSBC customer, you can call our team of specialists on 0800 028 7183 to get a helping hand.1
Lines are open:
Please note, lines will not be open on public holidays.
Citizens Advice, National Debtline or StepChange Debt Charity may be able to provide some professional assistance as well.
See tips on how to stop spending more than you earn.
