Transfer Balance Fees

Sarzzie

Hello,

I'm a bit confused by all this. At present we owe £3000 on our credit card and only pay back the min each month, our overdraft is £950 and we just live in that each month. The bank phoned up last week cause we went £2 over the overdraft limit and suggested that we take out a bank loan so we could cover both of these, and start again.
BUT
Wouldn't this Credit card tarting be the answer? cheaper? This credit card is the first we have ever had so it is a very new world! Could I take out a credit card and use it to clear the overdraft? We are still in the 18month contact with the Credit card so how do I get out of that?

Many thanks in advanced
Sarzzie x

CLAPTON

If you credit rating is good then you can apply for a 0% BT credit card and shift the debts around.

However, you need to address the spending habits that are putting you in this position... simply moving the debts doesn't pay them off.

what are the APRs of the CC and what of the OD?

What do you mean you are still in the 18month contract with the credit card?

Sarzzie

Hi Clapton, thanks for your reply.

I think our credit score is ok, we have only paid back min amount but it's done via DD so I don't forget! So I think the credit score should be fine.

Yes we have been spending out of our depth, nothing too outragous, just trying to live normally with three children BUT once we have addressed this issue we will only spend what we have.

The APR is 18.9% on the credit card, don't know what the Overdraft is but we pay on average £5 a month in charges/fees.

When we first got our credit card in October last year they said we have an 18month contact with them, I'm also confused about this and am going to dig out the paperwork and will get back to you on this issue.

Thank you for your time

Sarzzie

Ok, back again!

Found my paperwork, no mention of an 18month contact - sorry about that I must have dreamt that bit....*feeling very sheepish!*

My Credit card is 16.9% not 18.9% as I thought as well *feeling even more sheepish!*

And I was shocked to realise that we have only had the card since December 2007, terrible how quickly you spend.

Thanks for your help...

JayZed

Sarzzie, it's definitely worth applying for a 0% balance transfer card - at the moment with a £3000 debt at 16.9%, even if you stop all spending on the card, if you're only making the minimum payments you'll be paying £507 a year in interest, plus whatever you pay on your £950 overdraft. You're a lender's dream customer, and frankly you're being fleeced.

Apply for a 0% balance transfer card and move your credit card balance to that. DON'T BUY ANYTHING, EVER with this new card (if you do it will work out very expensive), and aim to pay back as much as you can afford each month - don't just make the minimum payment. If you're not able to clear the card before the 0% deal expires, no worries, just tart to a new card - but don't use this as an excuse to avoid paying off the debt.

Do read Martin's articles on credit cards on this site - they're really useful. Credit cards can be a useful tool, but it sounds as though you're just getting yourselves into expensive debt (not surprising: kids aren't cheap!). You've realised this very quickly - good for you. If you do something about it now you can nip it in the bud and stop things from getting out of control.

Sorry if the above sounds a bit patronising - it's just that it seems that you're at a point where you could go either way - spiralling into worsening debt by being a credit card minimum-payment sucker, or bringing your finances back into line by using the credit facilities available to you in a smart and disciplined way.

CLAPTON

you need to address the spending issues NOW and not when you transfer your CC debts...

you need to realise that transferring your CC to a 0% one may NOT reduce your outgoings .. that depends upon the minimum payments conditions although of course it should reduce the TIME it takes to pay off.

do you have a comprehensive budget and do you stick to it ? ... do you know in details where you money goes... they are the keys to your situation

and of course stop spending anything on the credit card