Clear your overdraft for good

According to the FCA (as of August 2015), around 15% of consumers with an overdraft are permanently or usually overdrawn. With 40 million out of the 61 million active personal accounts in the British Isles having this facility, that’s a lot of people being kept awake at night.

If you are one of the millions who are struggling to get back to black, our six tips below aim to help:

1. Overdraft negotiating

If you regularly breach your agreed overdraft limit, try negotiating an extension of your overdraft limit with your bank. If it was a one-off mistake, ask for a charges refund. If you don't ask, you don't get.

2. Low-interest credit cards

Never use an overdraft as a long-term borrowing facility. With typical authorised overdraft rates currently between 18% and 19%, it makes much more sense to use a low-interest credit card.

Find the best credit card with Moneywise Best Buys

3. Transfer debt

Find a credit card that allows you to transfer your bank overdraft debt onto your card, like a balance transfer from another card at 0%. Some MBNA cards will allow this, but check the terms and conditions because these can change.

Best credit card rates

4. Checking balance

Check your balance regularly. Try to avoid paying by cheque as you can never be sure when the money will leave your account, making it harder to budget and overdraft limit breaches more likely.

5. Comparsion tools

Use online comparison tools to find a cheaper bank and then switch.

How to switch current accounts

6. Don't take the risk

If you simply can't help busting out of your overdraft limit, force yourself to have an account that doesn't offer an overdraft facility at all – and budget more carefully.

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