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Help with gas and electric bills
Utility arrears are debts to your gas, electricity or water provider. Millions of people in the UK have utilities arrears, but few people know how to tackle them. Get in touch to find out what you can do about your utility debts.
Many of home activities are done using one appliance or the other that you can do without on a good day. These appliances or call it equipment or gadgets uses energy to buy us convenience in doing our chores. With Coronavirus pandemic, we are operating on a different level entirely; energy suppliers are concerned as well as you, a homeowner. Whereas cutting in the energy consumption rate looks unachievable with a full house and adapting to working from home.
Moreover, looking at payslip today – the reduction in your salary, you question, how do you fit-in to this modern world that host deadliest virus. You are convinced that shouting and raging on family members to curtail usage will not help. Follow the provided answer to these frequently asked questions will instil courage and drives away weariness, for it enriches you with:
Ways to deal with your energy bills
Know your right when facing energy provider
Peace when working on settling of gas and electricity arrears.
Frequently asked questions about energy bills and arrears.
What could happen if I missed a payment in my gas and electricity bills?
First, missing a single payment means you are in arrears. Having arrears on priority bills is a humble circumstance that craves for the honourable position of settling your debt. Gas and electricity bills are priority bills that call for urgent attention as the consequences attached to not paying them on-time are unfriendly and severe.
One of the things that will happen when you have arrears is that your energy provider can turn you over to debt collector agents, specialist to run you down and capitalise your liabilities with disturbance and irritating calls. Also, your energy supplier may get an authorisation from the court to fix a prepayment card meter in your home.
With this prepaid card meter, you will have to choose to pay the allocated percentage of your arrears or lose the supply. On rare cases will your provider remove your meter and cut off your supply.
What can I do if I have difficulty paying my bills?
You are not the first person to be caught up in a situation like this, and you won’t be the last. Contact your supplier and discuss the circumstances you are facing and possible ways they could be of help.
Be ready to negotiate a deal with your supplier. And pour out your mind, and deliberate on a repayment plan. If you don’t talk with your energy provider when you suppose to, then patiently endure wrath from your supplier.
Make a repayment plan with your supplier.
Ruminate over the monthly income you can afford toward paying backing your arrears, mind you; this can’t be done at the expense of your current bill. Disclose your plan to your energy provider and stick to it as much as you can. Your supplier takes pleasure in agreeing with your proposal because this is what you are being compelled to when you end up with a prepayment card meter.
Therefore, act honourable by taking on a repayment plan before having your depravity of energy (cutting off energy supply) as a mandate to your repayment.
What happens if I can’t afford the repayment plan?
Contact your supplier for a repayment plan that will not be a straitjacket causing difficulty. Your supplier may be lenient to accept your plea for a new plan.
Can I use benefits to repay my gas and electricity arrears?
You can channel your benefits to pay designated part of your arrears and keep the remaining for the current bill. Funnelling your benefits to this effect is called third-party deduction or fuel direct. These windfalls aren’t for everyone, that implies there are criteria and prerequisite for eligibility to these privileges. Namely, the benefits are:
Income-Based Jobseeker’s Allowance
Income-related Employment and Support Allowance
Pension credit, etc.
Setup your fuel direct via Jobcentre; they will contact your supplier and clock a deal with them. The provider will return the favour by telling you about the repayment plan and how much you are using in funding your arrears.
Is there a grant to help with paying off arrears?
Don’t be ashamed to seek help when it is going out of hand; fortune still awaits you if you can cry out to energy companies who offer charities and grants. You are still qualified for help even when you aren’t a customer.
Don’t deny yourself of grants from charitable trust willing to help you with your arrears. Charis Grants provide you with information on how to apply and get one.
What should I do if my bill is high?
People claim that a faulty meter is a cause for outrageous energy bills, seldomly has this been true. Unusually high energy bills can be an error from your energy supplier or an underestimation of appliance consumption from your side. When you have an excessive bill, check for the following before considering your meter to be faulty:
Current Meter reading
Check your meter to get the multiple energy units you have consumed and compared this with what you have in your bills. The bill may be estimated and having energy consumption less than the estimated assures that the supplier has erred. Take this reading to your supplier who will send staff for verification of values and numbers. If the current measurement by the meter is higher than the record on the bill, you are going to have more energy costs.
Keep previous records of meter reading.
The energy supplier is in the habit of offsetting a low estimate of energy consumption with a higher bill. If you had enjoyed a low bill, endure the high one, and they will restore it to equilibrium.
Be sure the bill is for your meter.
People living in a flat can be facing bills not meant for them as there is bewilderment for supplied on which meter to read. Bills contain a serial number of the meter which they are assigned to. Contact the supplier with the serial number of the meter and your meter reading for correction if the detail is not accurate.
Have you added a new appliance to your home?
Appliances that convert electrical energy to heat are guzzlers of electrical energy through their size seems not to take such gulp. Getting one or two of these appliances can lead to an upheaval in energy bills. An old electric device is not energy efficient as they are fashioned, and much useful energy is dissipated, resulting in more consumption to perform the same operation.
If after speaking with your supplier for advice and your bills never take the desired transition. Be patient enough to do the checks and work out the average weekly consumption, send this to your provider, and await change for some time.
When you hit the wall when revoking a high energy bill, intuitively you want to change your supplier. Another option that is worthy of consideration is talking with your utility provider for a friendly and cheaper deal. Only the new customers get this better deal is what we have been made to believe, however your right to request for a favorable discount (bargain) stands. Therefore, leave no stone untouched by making use of your privileges before making the switch.
Can I switch energy supplier?
Yes, you can if some circumstances warrant it, but it all depends on your arrears – how long you are in arrears. If you are taking a switch before 28 days in arrears, assuredly you have a successful transition. Conversely, having arrears that have lasted for over 28 days prohibit you from having a change of utility supplier.
It’s another ballgame with a payment meter customer who pays in advance through payment meter. Payment meter customer can still assess a switch if and only if the arrears is less than £500. Whatever your case may be when switching, you are liable to your arrears, and not even a penny is forgiven.
Can my energy supplier bill me for consumption over a year ago?
Ofgem has overruled the provider offsetting energy bill that is over a year ago. Back billing is when a supplier makes a bill to recover losses from a low estimation of your usage caused by inaccurate meter reading. It is not binding if you are responsible for disallowing them from taking your meter reading.
Council Tax Arrears
Council Tax Arrears Bailiffs
You are having a council tax arrears when you stop paying your council tax. Refuse owing council tax either when your barn overflow with granary or the fruits fail in their season. For the council tax arrears is a priority debt. As a result, it deserves preference before considering repaying catalogue debt or credit card debt. The consequences attached to this debt are severe that you will not want to toy and flirt with it.
The local and regional authority within England, Wales, and Scotland (United Kingdom of Great Britain) earn at least a quarter of their income from council tax. Most households within these nations are obliged to cast a portion of their income to pay council tax. However, council tax is not fixed tax for all demographic but varies depending on:
The value of your home
Your monthly earning
The number of people living in the house.
What to do when I can’t pay my council tax?
If you can afford to pay your council tax, don’t tarry to do this:
Contact the council by placing a call to the council tax office and tell them about your situation. You have to hasten to meet with them because the council is quick to make court proceeding against when you are in arrears. In your conversation, make a treaty with them to repay your arrears.
To show the gravity of the situation and sincerity of your heart, send to them a print containing your budget, showing your incomes and expenditure. It goes a long way to arouse their compassion and judge in your favour by accepting your plea.
Suppose you are unyielding to your council and fail to give a proposal for repayment of arrears. The local authority will do you the honour of contacting you, if neglected, then they take court actions immediately. Taking a court action against you will be grave, for they will juice an extra hundred pounds in the process of retrieving what is rightfully their own.
How can I pay my council tax?
You can clear your council levy with one-time payment a year, but this can be a lot of funds. If you are a patriot of the council, this can be convenient if you either get a massive income or have a windfall. Another modest means is paying in either weekly or monthly instalment. You will distribute or spread your tax over ten months. If you are experiencing some draught income-wise, the chance to extend payment for 12 months stands to lessen the amount you pay each month.
Usually, the annual bill is passed out the month of March showing the amount of your council tax. There can be a delay in sending of the bills if you have a change of home; nevertheless, all payment must be made before the end of April unfailingly.
What happens if I can’t pay my council tax arrears?
Your local authorities are vested with much power and therefore quick in avenging itself and paying appropriate retribution to house owner tardy to council levy. Having a council tax arrears may result to a bailiff (known as sheriff in Scotland) to visit your premises.
Suppose you fail from being faithful to paying of council tax in instalment, you will receive a letter from the council after the day 14th from when you suppose to make payment. This letter is to remind you of your commitment. Paying within the first seven days after the reminder makes you continue with the tax in instalment.
What if I can’t make payment within the first seven days?
It is gracious to pay in the first seven days because, after this duration, the council will aggravate the situation by averting your instalment payment plan and making a request for the rest of the year council tax.
After you are command to hassle out the remaining council tax for the year, you are given an extra seven days to do this. Not paying in full means the council will press liability order against you in the court of law. Each country making up Great Britain has differences when it comes to rule and processes the court take toward a liability order.
Can council tax arrears be written off?
The council is fully capable of written off your arrears. But, they consider this when you are pounded to dust by severe and several catastrophes. They write off tax arrears liberally for debtor undergoing bankruptcy or depending on debt relief order (DRO) for a solution. Suppose your chosen insolvency option is Individual Voluntary Arrangement (IVA), you can still have your council tax arrears cover by your arrangement. If local authority permit inclusion of owing they you can scrape writing off at the end of the IVA journey. With IVA, you have to doubt that council accepting your proposal.
Can bailiff forcefully enter your home for council tax?
Yes, they can make a forced entry if you have made a controlled goods agreement with them which empower to breach your peace and disposes you of your possession when you fail with repayment.
Can I be imprisoned for not clearing my council tax arrears?
When you rebel against the court order in England to make an assigned payment toward the clearing of your tax arrears, you may be put behind bars (sent to jail) for three months, it is scarce to happen as it is the last resort.
What are the council tax bands?
Bands are used to charge your council tax base on the value of your house in 1991. The higher the value of your house, the higher your band and the more you will pay for council tax. These bands are from A to H with Band A, the cheapest of all and Band H topping the class with a huge amount to pay the local authorities.
If you believe your house as being categories in the wrong band, report to the council for a revaluation of your house worth. So, you can have transition within the bands in both directions.
Is my council tax arrears compulsory if I am on benefit?
The upside to when you have a low income or take benefit based income is that you qualify for a council tax reduction not for an evasion.
Local authorities are autonomous, thereby having different rules and eligibility criteria for council tax reduction.
Council tax reduction
If your council tax becomes burdensome with your income, ask for relief. By qualifying for a council tax relief you get:
A 25% single person discount if you are living on your own (a lone wolf). You could still live with a person(s) get a tax reduction as an entitlement if they are full-time student, apprentice or mentally impaired.
If you have of age and above pension age, you get an extra council tax reduction.
If you have a cohabit or live with a disabled person, and you have modified the facility for adaptation, you can get a tax reduction by one band.
It is expected of you to bring to the hearing the good news of positive change or improvement in circumstances to get a new version of your council tax bill.
Council tax in Scotland
If your council start court action because of not paying at the due time, they will apply to a sheriff court for a summary warrant. Automatically, you have 10% of your outstanding council tax added to your bills.
You will receive a letter summoning you to the payment of arrears with the 10% charges within the next 14 days. The charge to payment comes with a form to fill to request for more time for payment of an order. Fills this form, tick where you supposed to and head to the sheriff office with a realistic offer of payment if you are having a problem forming a reasonable and agreeable offer of payment, contact debt help service or charities for help.
If the council accept your offer, then you are free from their rebuke provided you make payments as agreed. But if you don’t request for time to pay order or default your offer of payment. Then watch them in a fury stretching their hands to take from you. The common ways they do this are:
Wages and salary arrestment: they take directly from your earnings
Bank arrestment: council are also authorised to get money to clear your arrears from your saving or bank account.
There are also extreme measures the local authorities employ in withdrawing money for from you, but they are usually the last result. They include:
Sending sheriff to collect good within and outside your house.
Making you bankrupt through Sequestration or MAP bankruptcy, if you are qualified.
Court action in England and Wales
If your council starts litigation, you receive a summoning letter which contains the date and time of the court hearing. You have an inevitable extra charge to pay with your bills. The magistrate issues a liability order at the hearing.
What’s a Liability order?
Liability order allows the councils to take actions in collecting tax arrears. The magistrate issue this, when you can’t claim there had been a mistake on the part of your local authorities or you, have paid before the hearing.
A liability order gives the council and authority to proceed with options, such as:
Using a bailiff to seize goods.
Wages arrestment: which means taking a percentage of your income directly.
Withdrawing some amount from your benefit to clear your tax arrears. Usually, a maximum of £3.70 is removed from whichever benefits you are enjoying. Not limited to benefit alone, they can also take a maximum of 5% of your standard allowance from your universal credit.
Their last resorts when you become an ardent debtor (rebel) of your council are:
Holding your tax arrears against your house when you owed more than £1000.
Making you bankrupt when you have more than £5000 unpaid tax arrears in England and Wales or if you have a £750 tax arrears in Northern Ireland.
Send you to prison for up to three months if all other means can be employed to encourage repayment. It is only peculiar to those living in England.
The catalogue allows making purchases of expensive items and paying with an affordable monthly income. Catalogue excites and encourages immediate gratification using the money you don’t have. It is relatively easy to qualify for catalogue, and this is why it is a widely accepted means of purchasing items. Their ‘buy now and pay later’ scheme has snared many into an insurmountable debt and makes catalogue debt domineering on many debtors’ credit file than a payday loan.
The disadvantage of catalogue debt is that it has a high-interest rate that accruing with time. It gives a justifiable profit to the lenders for the risk of providing credits with less strict eligibility criteria. To the debtor, the high-interest rate propagates your debt to go haywire, even paying the minimum every month can surety your freedom from the catalogue debt. The extortionate interest rate should alert your cognitive mind before succumbing to the pressing joy of buying a new outfit from a catalogue company.
How to avoid catalogue debt?
If you make some blind orders and realised it’s not the best for you, maybe after prioritising your need or evaluating your means of repayment. You can still escape the glooming catalogue debt when the order is delivered. There’s ample chance to return deliverables if you have a change of heart. You have 14 days to cancel this order after having the goods. However, you will have to return the goods as it was brought to you.
To return the item, you have to preserve it with all care to retain originality. The catalogue company requests payment for delivery which is minuscule of the excruciating price you will end up paying under the stealthy repayment plan. The choice is yours to make within the first two weeks to either reject the item under your possession from the catalogue company or unconcealed it for use right away.
Returning of goods is not limited to order you are having a second thought over. But, you can also give back goods that are not satisfactory or delivered as prescribed or stipulated.
What happens when I can’t repay your catalogue debt?
When you have missed minimum payment or have catalogue arrears, the catalogue company will contact you for duly dedication to repayment. Without your prompt requite, your account will default and then presses with other collection means. Also, the company will close your account and debar you from purchasing with it.
The company can decide to pass the amount you are owing to a debt collection agency or take legal action against you. Having debt collection on your trail is not good news, for they will come thronging fast to cast a depressing shadow upon your poor soul.
However, it would be best if you treated catalogue debt as a non-priority debt because that what it is. Don’t sacrifice or forgo utility and household bill and other living costs for catalogue bills. After all, it’s not secured against your house (not mortgage arrears), and there is no repossession to fear and for that reason, don’t live a cursed life. And unlike hire purchased, you can’t be asked to return goods to the company upon defaulting repayment.
Struggling with catalogue debt?
The annual percentage rate of catalogue company is high and annoying. This rate has made debtors allured with the ‘buy and pay later’ plan it bestow to travail under savagery. Paying minimum payment, you won’t pass a season to realise it only keep your account open for more debt. However, you still have a living, soaring, and growing debt to finance.
The minimum payment on catalogue debt
You can pay the designated minimum on your catalogue debt as it’s better than paying nothing toward settling your debt. Minimum payment will not work in any way to clear your debt, conversely to prevail over the debt you have to double down and channel more of your cash influx in restoration from debt.
Paying just the minimum isn’t sufficient to cancel the monthly interest on your debt. Therefore, you will still have debt and interest to repay after the lean payment. Consistency with the least possible payment will cause your debt to aggravate, and challenging to manage. Your account will be subjected to persistent debt, appalling suffering.
Paying Catalogue debt
Persistent debt occurs when amount repays on your debt can’t reduce the principal of your liability, but more of your repayments erase accruing interest and charge. The catalogue can turn out to be persistent when you afford the predicated mean repayment. In simple words, persistent debt is misery at the climax, that is why even your lender sends you notification letter to increase monthly payment.
After 18 months of persistent debt
If you are not able to stride out of the ‘prison box of persistent debt’, the catalogue company contact you to feed your debt repayment plan with more income. At this stage, you can turn some extra fund but not retirement fund or life-saving funds to complement your effort to do away with persisting debt before 36 months.
After 27 months
If your debt is still growing strong and your account groans with persistent debt. The catalogue company doesn’t grow cold to call and encourage you to plunge out the debt that frustrates and nullify your repayment effort, before the end of 36 months.
After 36 months
At 36 months, the company will contact you again, only that this time they are not here to admonish and give period for a self-recovery plan from debt. Instead, they offer 3 or 4 years and suggests to be more obligated to your debt redemption. The proposals they put before you are:
An affordable debt solution plan to scrape quick recovery from your catalogue debt
Debt solution by using other available credit opportunity and product such as credit cards or loan.
Suppose these suggestions aren’t aligning with your circumstances. In that case, they give lenient options like stopping interest and charges for some period to enable repayment, or reduce the minimum account payment. For these lenient options, you will pay the price with your credit rating and unfriendly report in your credit file.
Payday Loans Debt
Payday loans are short-term loans originally designed to tide people over until payday. With incredibly high-interest rates, a relatively small amount of money lent via a payday loan can be difficult to pay off. If you’re struggling with repayments and need advice, we may be able to help.
Payday loan debt consolidation
Payday loans are short term and high-interest loan that is unsecured against any property of the debtor. Payday companies only give credit in advance to your salary or income. Therefore, you get a fraction of your income in advance. A payday loan is often referred to as payday advance, salary loan, payroll loan, etc.
A payday loan is available for people in need of cash for small purchases before their next payday. Payday companies provide £50 to £1000 immediate cash with a high-interest rate that makes it a bad debt. You have a few weeks to repay.
Payday loan debt help
A payday loan gives money for the short term with an unfavorable interest rate. However, there are possibilities for an extension to spread repayment to three months. Despite this, it is advisable to stay away from it and look out for other alternatives. It’s a debt that can quickly spin out of control unless giving adequate attention to the repayment plan.
Payday companies charge £18 to £24 for every £100 they lend you upon your repayment in time. If you default payment, you will be charged with an additional £15 for the late payment fee. At a rate like this, the Annual Percentage Rate (APR) of a payday loan is between 500% to 1500% compared to 22.8% of credit card debt.
Is a payday loan right for me?
It is crucial for you to contemplate before taking out a payday loan even in circumstances that call for it because of the extorting interest rate. Considering the other alternatives like credit card and the costly catalog debt, you will end up seeing the destruction and ‘open tomb’ that awaits you in your pursuit of a payday loan.
Generally, the usury (uncurbed exorbitant rate) of the payday loan is a big reason to stay away and conclude it can never be a debt solution or means for sourcing funds. For it is a snare that can make getting your essential commodity in the future difficult.
Another thing to consider when pursuing a payday is that do you have the cash influx to repay your owing within the allotted time. If not, desist from it. Also, know that your lender can’t give an interest rate above 8% and you are not to pay back more than twice the borrowed amount.
Recurring payment means
You have to start pondering on a viable means for repaying your loan as the lender will request for it. Predominantly, the lender creates your recurring payment means or Continuous payment authority (CPA) around your bank account with debit card. The repayment of the loan, together with interest in the full amount is within a few weeks to a month.
When the lender couldn’t make their weekly deduction of the agreed amount from your bank account on the consented date because of an insufficient fund in it, they will charge you for late payment. You should be savvy that your payday lender can’t use the recurring payment more than twice if there are insufficient reserves in your account and must not take a part payment from it.
If the bank account for your CPA is with overdraft protection, the payday companies will be able to make a withdrawal when your account has hit zero. You must take care of this as you have incurred extra charges on overdrawing your account.
What happens if I am struggling with paying back my payday loan?
If paying your cash advance loan will hinder getting the essential commodity for your daily sustenance. You can suspend repayment by telling your bank not to complete their withdrawal transaction. However, notification to put this in place must be done before the agreed-upon payment date.
But quitting your CPA does not close down your repayment nor decrease your deficit before your lender. Your debt with your creditor remains your burden to bear. It is better and advisable to use other convenient means to repay other than your account than allowing constant scooping of payment of bad debts from your account which can cause you to have arrears in your mortgage, council tax, water, gas, and water, etc.
If you are having a problem with your payday lender, contact your provider with a constant equity stream other than your bank account and have the freedom that you desire.
Extension of payday loan
The payday lenders are a bit flexible with the time of repayment by providing a rollover which is an extension of repayment time for the current loan. Try to sway away from rolling over because lenders attach extra charges, extra fees, and increased interest rates.
Payday lenders cant provide rollover or deferral of repayment more than twice and must assign an information sheet and a free debt advice service each time they give an offer for deferral. Also, they give an additional loan despite the currently-unpaid debt.
What should I do when taking a payday loan?
Suppose a payday loan occurs to be bettermost for your situation. In that case, you have to take your time around the deals and compare their charges, interest rate, and fees to go for lenders with little unfavorable options.
Also, check the amount you can borrow from the lender, the main features of the loan, how much you will pay back in full, and the consequences of delaying repayment. You have to evaluate all their terms and conditions that apply before opting for it.
Payday Loan Consolidation
You can’t be sent to jail for a consumer credit like a payday loan. It’s not a priority debt. Even for priority debt like council tax arrears, imprisonment is a last alternative when other recovery means have failed. It is when you live only in England you can be sent to jail for council tax arrears. Therefore, do away with all worry and take a glaring look at your budget, whether there can be an expense to exempt and settle your payday debt.
Payday Loan Help
If you refuse to repay your payday loan, your payday lender will send the remainder and give calls to have your commitment to a repayment plan. If all these resorts can’t cause you to repay, then your creditor can charge you to a county court to get judgment fon immediate payment or an offer of payment by installment. The court will monitor your progress and compliance with the court decision.
If you owe money and cannot pay it back then a creditor may apply to the County Court for a judgment against you to claim the money. Get in touch to find out what you can do if someone has taken a County Court action against you.
An overdraft is an extension of a bank account, allowing you to continue to withdraw money even after the account reaches zero. This money is given on a borrowed basis, often has interest or a fee attached, and is repayable ‘on demand’.
Paying off Overdraft
Overdraft is a form of credit available for account holder under a financial institution to have a withdrawal when the account is destitute of funds. An overdraft allows deriving money at the deficiency of zero balance or insufficient fund of your account. If you need a short term loan, and credit card interest rate is a reproach to you, then overdraft can be your refuge in time of an emergency and remain potent with your financial life.
The institutions usually local banks, permit withdrawal to an agreed-upon limit. Overdraft within the authorised or prescribed limit is subjected to a healthy interest rate but exceeding this boundary result in an additional interest rate and charges. Mostly, fees are paid when your bank account is overdrawn, and the interest rate monthly kick-starts when the when fees are paid.
Bank account without processed overdraft enablement beforehand pays a bank overdraft fee when you take extra funds. If you have an overdraft account, a withdrawal that would have been rejected would be discharged at your request, and bank check that should be bounced will receive pay.
The benefits of an overdraft
Accustomed means of withdrawal
Overdraft is accessible with your acquainted means of withdrawing juice for your account, which is: ATM, online, Debit Mastercard, Mobile, Telephone, to mention a few.
Repayment time flexibility
With an overdraft, you can’t be in arrears, neither is there a repayment plan or schedule to default. For an overdraft, you pay when you want to pay. Your next salary and wages can be a means of settling outstanding overdraft.
A cautioning preset or predetermined limit
You set your expediency with overdraft limit to refrain you from buying at a whim and result to overspending. If you like operating loan at the low rate, this can be a stopping gauge or indicator to suspend purchase and imbibe patience. Going beyond the preset limit can incur dishonour fee.
Allow for multiple withdrawal.
You can overdraw your account multiple times a day, only just that you get charged for each withdrawal. Therefore, this is handy when unforeseen circumstances come your way in segments, but mind you, you may be aggravating our debt with this stealthy penury.
Get out of Overdraft
It’s easy to find yourself engulfed into Overdraft debt. Let’s see the various cons of having overdraft and how to Get out of Overdraft.
The fees on an overdraft are in varying orders, for there’s a sustained overdraft fee which is a charge for not depositing to restore positivity to the account. This fees may be daily or recurring depending on the financial institution policy guiding your overdraft protection. Another fee is unauthorised overdraft fee, a fee you pay when you fetch from the bank beyond the cap of authorised overdraft limit. And there’s another fee called the non-sufficient fund (NSF) fee for account holder given an overdrawn without toggle on the facility for emergency need. These fees on overdraft have made it an equal to a payday loan, if not worse than payday.
A big thanks to the Financial Conduct Authority (FCA) that bans and cast out excessive and confusing fees. Their impact is noticeable also with a new price rule to reduce the burden on overdraft. The changes made by FCA are:
A single annual percentage rate must be used for overdrafts.
There are no more daily or weekly fees that stealthily put in debts.
The same interest rate applies to both unarranged and arranged overdraft.
The FCA rules are good on one side, but the consequence of these constrictions and restriction on banks is a bitter farewell to interest-free overdraft and overdraft buffer. If you doubt, then contact your banks for confirmation. From record, banks and building society interest rate on overdraft now converge on 15% to 40%.
Bank can take away your overdraft protection at their wish and whim.
Removing your overdraft protection facility is another facet where banks can make you crazy, really they will may you feel a cold rush down your spine when you make a request for an overdrawn and fail to clear your transaction. You don’t want this, then the remedial not to be cut up in such a scenario is getting a credit card supposing they fail to keep to promise.
Bank usually revoke overdrawn when client or account holder has pitfall and shortcoming in cash inflow into the account to cover the request.
An overdraft cannot be used for a debt consolidation loan.
Don’t dream of this — consolidating your debt with an overdraft. It will prolong your days of misery under the travail of debt. Personal loan, equity release, P2P lenders, 0% credit card can be used for consolidation. Overdraft is out of the option because by paying £1 to £3 each day on overdraft can make you grief than a low-interest rate loan.
How to apply for an overdraft?
You can get overdraft protection when you are applying for a bank account. For an existing account, you can install this protection in easy steps on a mobile banking app, inline banking, in a branch, or which way is convenient for you. Confirmation for successful overdraft application is sent to you, which may be instantly or after two or three days.
Do overdraft affect credit score?
If your bank pays your overdrawn from its fund, your credit score is protected if you hasten with repayment. But if not, the bank has no other options than to turns your overdraft to a collection agency because you don’t repay your debt in due time. Then your credit score will suffer a declination when the credit report agencies like Equifax, Experian, and TransUnion get aware.
Another available alternative is to connect your overdraft to your credit card account. You are excluded from the bank funds, and the source of your overdraft protection is the credit card. When your debt amplifies, invariably your credit score concedes to backslides.
Best way to get out of overdraft
Overdraft is a debt you have to pay with fees and interest that apply to remain honourable. If you are struggling with paying off your overdraft, there are measures to streamline yourself and arrive at the safe shore despite the financial impediment:
Transfer your debt to a 0% credit card
If you have a good credit rating, then you can have a 0% credit card. Pay your overdraft by borrowing from your credit card, then try as much as possible to clear your credit card debt before the end of the interest-free period, which can last for a few years. Hey, before jumping in a rash for this, there is a transfer handling fee of about 3% of the amount to be moved to the credit card. However, this doesn’t spite you like extorting overdraft fee and interest rate.
A personal loan is an unsecured loan with a relatively low-interest rate (when compared with overdraft annual percentage rate) but of high qualification standard (strict eligibility criteria). Apply for a personal loan, pay off your overdraft, then stick to your equal monthly instalment (EMI) for one to five years.
Switch to a better current account
Current account with generous room for overdraft and interest-free can be of help when overdraft becomes a threat. Current account with the desired packages is scouted for. After, you can move your negativity over to it and buy move time, stop your debt from swollen, and clear your owing.
Make a strict budget.
Paying your overdraft requires discipline and diligence. In retrospect, how did you spend? What is not necessary that chop away cash every month? You will be surprised that suspending or cancelling two to three of them will equip you for your overdraft payment. Your budget is your weapon, therefore start dusting and grinding, and overdraft will not endure your prudence.
Use your saving
If a debt has no increment attached then cut it slack, but overdraft protection is not one that you can linger on your slothful bed because the overdraft interest rate is higher than saving interest rate. It is a motivation behind taking your saving for immediate salvation from liabilities, nothing less nothing more.
How to avoid overdraft fees?
The key to avoiding overdraft fee is alertness. Alertness to your need encourages prioritising and if need be, rate shopping for a personal loan for forecast expenditure. Acquaintance with your account to not overdrawn. How do you have intimacy with your account? They are:
Get your bank app on your phone.
Set a notification or text alert when you don’t have an insufficient fund for your requested withdrawal.
Banking via phone.
Go through your bank letter.
Periodical and social post are what we find interesting. I am not telling you to find your bank letter exhilarating but try not to treat their posting as spam before reading through. It is in their letter you gat specific information like increase in overdraft rate and fees, the available extension for your arranged overdraft limit.
Close your overdraft facility
Finally, if their protection now grows to a temptation that lures unrelentingly. Doing away with it can be an escape from the predicaments that spring from it.
A loan is an act of giving money, property or other goods to another person in exchange for the future repayment of the original amount plus interest or other charges. Depending on the rate of interest attached to a loan, the total repayment can be significantly more than the amount borrowed.
Student loan written off
A Student loan is an unsecured loan you borrowed from a bank (financial institution) and nonfinancial institution to satisfy your personal needs. In many circumstances, the Student Loan is written off and we can do it for you without any fee or interest rate. Usually, Student loans are unsecured loans which means that your house or car is not used as collateral. Therefore your lender can’t auction your property or start repossession action when you default repayment. Student loans are used for purposes, of Higher studies or specialized training. Once you start earing after your study is complete you need to pay the Student Loan off.
Debt Advice For Personal Loan
Personal loans allow you to spread the repayment of loans and interest over an average of two to five years with affordable installment. It’s an available equated monthly installment for purchase with a fairer annual percentage rate (APR) than catalog or credit card debt. The loan APR falls within the range of 6 to 36% depending on the lender, now we can see the absurdity and irrationality of catalogue which could have an average rate of 40% with minimal variability.
The eligibility criteria for the loan are not as cheap when compare with counterpart credit options like the catalog. Lenders justify granting credit after a profound look at your factors and records revolving around your creditworthiness.
How to apply for a personal loan?
Personal loans are lawful for meeting myriads of pressing desire ranging from household craving to business perceived need. The loan is not suitable or helpful for all situations, by giving a piercing consideration can change your route in pursuing your longing. A personal loan is fit as a square for debt consolidation, unforeseen medical bills, and other intents like vacations, student loan, etc.
On the other hand, when sourcing for a lump sum for home improvement, the best of the options you can have is remortgage or equity release. Also, an auto loan is preferable to personal loan when buying a car. If you are securing a home, a mortgage seems a fairer deal. House mortgage, remortgage schemes, auto loan, are secured debt having the property you are acquiring or improving as collateral. Therefore they have a lower interest rate.
Before going for a personal loan, foremost decide on the amount you want to borrow and your repayment potential. If you need a quick save that can be resolved in no distance time, you may consider 0% annual percentage rate of the credit card provided you have a high confidence level to make repayment before the end of the grace period.
How much can I borrow with a personal loan?
The decision on the lump sum you can obtain from personal loan saves from requesting excess or deficit amount. You don’t have to take amount more than you need because you are paying interest which is proportional to the base amount borrowed. And a deficit or insufficient amount will lead you to source for high rate credit options.
While taking cognitive of the amount you need, it a better to ruminate alongside your potential means for relieving your loan. It is better to endure depravity of the moment when expecting a financial outburst than to expend your increase to clear a soaring debt.
Personal loans are not an open check to any amount, how much you can borrow depends on your income. Your lending party are also careful to find out whether you are self-employed or a salary earner. It might look disinteresting as the bank assume a killjoy or ‘kill plan’. But, it’s better to have a standpoint that the bank offering an amount that you will settle with 40% to 50% of your income as the equate monthly instalment (EMI) for 2 – 5 years is safety.
If the debtor summons for the loan when struggling with debt, 40 – 50% of income as EMI is too ideal to have. Therefore the borrower will have to settle for a morsel. The small fragment will be of high-interest rate to discourage application and serve the lender for the significant risk.
For self-employed seeking out a personal loan, the financial institution will reason your business profit margin in conjunction with the recent profit and loss statement to determine the lump sum for the loan. Concerning the amount to lend out, information on current mortgage deals is vital to your lender.
Check your credit rating.
If a personal loan is all you can envisage helping right now, then proceed further to check your retrospect action with credit. You can have a concise report from reporting agencies like Equifax, TransUnion, Experian, etc. By visiting annualcreditrepot.com, you use the once-a-year free credit report from these trusted credit agency. One of the valued added services of your credit card issuer is monthly accessing of your credit score. Some notable online vendors give free trial for some days or month before charging for subsequent credit report enquiry.
If you have a good credit score that lies within 750 – 800, congratulation, you will be able to access a loan with an interest rate as low as 15% to 10%. But, if your record is between 500 to 600, you may suspend pursuing the personal loan if time and objective permit, and work on your interaction with your current lenders to move up the ladder. The guiding principle is the higher your credit score, the lower the interest rate of personal loan from even the best lender will be.
Where to source for a personal loan?
There are two primary sources of personal loan: banks and credit unions, and non-banking financial institution (NBFI). The former has a banking license or charter, and the latter doesn’t have a banking license.
Bank and credit union
Their operations and administrations are guided by the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration(NCUA), etc. Local banks and credit unions are people-first choices for personal loans, but their repulsive attribute is the higher loan qualification standard. Banks provide you with a loan officer to guide you through the process. Credit union offer low-interest loan to members only.
It includes online financial companies, insurance companies, peer to peer (P2P) lenders, payday loan, and other non-banking institution. They give loans at a higher interest rate than banks and credit unions. They still find your appealing for credit offer when banks deny. P2P lenders give personal loan with lower possible interest rate if you have a good credit history, but if your credit report is horrible, you will not find solace in their rate. A payday loan should be your last resort as they extort with high rate and hidden charges.
Check your eligibility
Criteria for eligibility vary from lender to lender; what they consider are:
The company you are working for
What does Pre-qualified mean?
Pre-qualified or pre-approval is not a guarantee for a loan but the lender assess you to have financial capabilities that are esteemable and find fitting to be a prospective borrower. It involves filling an online form and providing the necessary, and there’s the verification of information which may take an instant or a couple of days.
Acquaint yourself with the details
When you have been Pre-qualified, read the pre-qualified letter and let your curiosity and inquisition provide answers to these following questions:
What’s the annual percentage loan (APR) for the loan?
What are the terms and conditions guiding the loan?
What’s the expected monthly payment for the loaned amount?
Is there any origination fee, late payment penalty, early payment charges, or hidden charges associated with the loan?
Is the interest rate fixed or variable? If variable, what’s the possible lower and upper limit?
Does the loan require any collateral?
What is their flexibility with automatical withdrawal?
If there’s a disagreement, is there any arbitrator apart from the court?
You can get answers to the questions mentioned above by visiting the lender’s website. Then, proceed to apply for the loan. You can also request quotations from many lenders (rate shop) only to tie the enquiry within 14 – 30 days to have a single withdrawal from credit score when lender make a hard inquiry.
Moreover, get ready to provide documents like official ID, proof of income (pay stub) when a lender asks. After submission and documentation, wait for your lender reply and choose the best deal which you had rate shop. Put your signature on paper, authenticate your agreement and get the loan. You have been dragged through this ordeal to know it is a loan and not a windfall, therefore start working against defaulting a single payment.
Credit cards can be used to make purchases when you might not have the cash ready, to reduce the cost of expensive debt by getting a lower interest rate, and to earn rewards and cashback when you make purchases. If you’re struggling to make repayments on your credit card, get in touch today.
Previous House Rent Arrears
Applying to current and former tenancies, house arrears can include non-payment of rent, court costs, water rates, chargeable repairs, and compensation owed to landlords where a tenancy has been ended and the tenant has failed to leave.
A benefit overpayment can happen for a number of reasons. This could be because the benefit office made a mistake, or because you didn’t know you had to tell them about a change of circumstances that meant you were entitled to less benefits. For more information and advice on benefit overpayments, get in touch today.
If the amount your home is sold for does not cover the outstanding mortgage and any secured loans, you will owe the remaining money to any associated lenders. This ‘mortgage shortfall’ can be a significant debt that many people struggle to pay off. Get in touch to find out what you can do about your mortgage debt.