If you live most of the month in your overdraft, you may be paying upwards of 20% in interest, making this a very expensive form of borrowing.
However, there are ways for you to clear your balance and get out of your overdraft for good.
You should first find out what the current balance of your overdraft is and how much it costs you in interest and other charges.
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.
Move to an interest-free overdraft
A balance of £1,000 in an overdraft with an interest rate of 19.9% adds £199 per year to your borrowing.
It is possible to move your negative overdraft balance to a current account with an interest-free overdraft. Doing so means you will cstop paying any interest charges on your account.
Move your debt to a 0% money transfer credit card
Most 0% money transfer credit cards will offer you an interest-free money transfer period for a set term.
You can use all your resources to pay off the debt in this period without the sting of interest.
Before switching, you need to be aware of:
Handling fees: Most 0% money transfer credit cards will apply a handling fee at around 3%, although this may cost less than your overdraft charges overall
Interest-free period ending: When your deal ends, the account will revert to the lender's standard rate, which could mean you end up paying more than before
Consider a low rate personal loan
If you are paying extortionate overdraft interest rates, paying it off with a personal loan could save you in the long run.
Providing you choose the right loan you will reduce your interest payments, which will have a benefit as you will be able to pay down your balance faster and interest will accumulate at a slower rate.
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.