3 Ways to Escape the Overdraft Protection Debt Cycle for Good
How To Get Out of Overdraft Protection Debt
Being stuck in the overdraft protection debt cycle is a nightmare for many Canadians.
It can feel impossible to escape this trap, with interest payments and your living expenses making it challenging to make a dent in the overdraft you’ve built.
Thankfully, escaping the overdraft protection debt cycle can be easier than you might expect.
You have several paths to choose from when you’re approaching this side of your finances, and Bankruptcy Canada is here to help with all of them.
Escaping the Overdraft Protection Debt Cycle
The key to getting out of the overdraft protection debt cycle is building a solid plan.
Once you have an idea of the direction you’re taking, it will be much easier to work towards it, but there are a few ways to handle this.
It’s important that you consider each of these options in relation to your own finances and habits, as you may struggle with some more than others.
Baby Steps: Reduce Your Overdraft Limit As You Go
This first option is one of the more popular approaches to escaping the overdraft protection debt cycle.
Many people find themselves receiving paychecks at the start of the month, only to be right back at the bottom of their overdraft when the month is over.
You will need to strictly budget your finances, cut out unnecessary spending, and work to build a proper plan for your finances.
If you’re able to reduce your spending, you will have the opportunity to reduce your overdraft limit, ultimately working you towards freedom from your overdraft.
Treat Your Overdraft Like A Loan
Most people know how loans work; you pay off your debt in installments, slowly working your way out of it over the course of several months or years.
You can take the same approach with your overdraft, enabling you to escape from overdraft protection without having to change your lifestyle in extreme ways.
Start this process by opening a new bank account, though this won’t definitely shouldn’t have an overdraft.
Your pay will go into this account, leaving the old account to sit dormant until you make monthly payments to lower your debt.
It can be worth talking to your bank as you go through this process, ensuring that they know what you’re planning.
This can be an effective way to get out of the overdraft protection debt cycle, though, like the first option on this list, you will need to make sure that you have an effective budget in place to achieve your goals.
Setting targets for yourself will help with this.
Pay It Off In A Lump Sum
This final option is often the most challenging, though some will prefer this method above the rest.
Saving up a lump sum to pay off your overdraft will give you a solid goal to reach for, while also ensuring that you have savings set aside in case you find yourself in trouble.
You can continue to use your normal bank account with this method, but will also need to open a savings account to go with it.
With each pay day, you will put money into your savings account.
It may take some time to save up all of the money you need, especially if you have several thousand to pay off, but it will be worth working through this process.
Much like the option above, it will often be a good idea to let your bank know that this is the action that you’re taking.
Each of these options has the benefit of pushing you towards getting out of the overdraft protection debt cycle.
While you will have to go through a period of limited spending, you will have the chance to enjoy much greater financial freedom once you are out of this position.
This makes it well worth all of the work.
Getting Help With Overdraft Protection From Bankruptcy Canada
Here at Bankruptcy Canada, we have over 21 years of experience working with overdraft problems.
Our dedicated team is always happy to help when you find yourself in this position, offering honest and reliable advice to take you through the process of getting out of overdraft protection.
You can get in contact with Bankruptcy Canada by calling at 1-877-879-4770 or sending an email to us.
We offer confidential and obligation free advice, and will work extremely hard to help you to reach your financial goals.
You could be just one call away from escaping the burden of your bank account.