For example:

A 1,000 overdraft with an interest rate of 19.9% costs 199 a year.

If you live most of the month in your overdraft, you may pay 20% or more in interest as well as high fees.

But there are ways to clear your balance and get out of your overdraft for good.

Move your debt to a 0% money transfer credit card

You can use a 0% money transfer credit card to clear your overdraft. You can then pay back the credit card over its interest free period.

This can last up to a few years and lets you pay off the debt without being charged any interest. Before switching, you need to be aware of:

  1. 1.

    Handling fees: Most 0% money transfer credit cards apply a fee of around 3%, but this could be much less than your overdraft charges.

  2. 2.

    Interest free period ending: When your deal ends, you are charged lender's standard rate unless you have paid off the balance.

Move to an interest free overdraft

You could move your negative overdraft balance to a current account with an interest free overdraft.

This means you stop paying any interest or other charges on your account. This gives you months or years to pay off the balance of your new overdraft without any fees.

Switching bank accounts is quick and easy, but you need to find a new account that offers you a big enough overdraft.

Consider a low rate personal loan

If you pay extortionate overdraft interest rates and fees, paying it off with a personal loan with a low interest rate could save you in the long run.

Choosing the right loan can reduce your interest payments, which means you can pay off your balance faster and pay less interest.

Pay off your overdraft

If you can be disciplined and are determined to pay off your overdraft, set yourself a strict budget and pay off your debt gradually, month by month.

Stick to a budget

Work out your budget to see exactly what goes out of your account and what comes in every month, as it is likely that your outgoings exceed your income.

You can then work out where you can make savings, so that some of your income goes towards getting yourself out of debt.

Chip away each month

Set yourself a target, an extra 100 below your overdraft limit every month for example.

Each month you will then have paid off 100 of your overdraft, and by budgeting strictly you can eventually eliminate your debt.

You can ask your bank to reduce your overdraft limit every month in line with the amount you are chipping away, meaning you will not be tempted to stray further into your overdraft again.

Use your savings to pay off your overdraft

If you can, use any savings you have to get yourself out of your overdraft.

As savings rates offer far lower interest rates than most overdrafts, your money would be better used by paying off debt and reducing the interest on your overdraft

Close your overdraft forever

Paying off your overdraft will be well worth it when you are no longer in the red, and can close your overdraft facility for good.

If you feel tempted to dip into your overdraft after this point, keep in mind the charges, interest rates, the time it took you to pay it off and the stress it caused you.

Get some support

It is not always easy sharing your financial problems with others, but try to talk about your plans with family and friends who could help you.

If you would prefer to seek professional assistance, you can speak to Citizens Advice Bureau, or the StepChange Debt Charity.