Any 0% card which you can transfer overdraft debt to?

foreversomeday

Hi all,

I am trying to sort out mine and OH's overdraft debts at the moment which are getting ridiculous.

Obviously we need to cut back etc on spending but I have started a thread in DFW to sort that out, so really I'm looking for a way to pay back the overdrafts, incurring minimum interest costs, and preferably flexibly.

We can't simply use a 0% card for spending until the overdraft is cleared because most of our spending out per month is on bills and all done on direct debit, plus I am finding it difficult to get through to OH how it works - he thinks on a 0% card we can get a card with say a £4000 limit and that means we will have the equivalent of £4000 cash to do what we want with (pay off the £3000 overdraft mostly!)

I have looked at bank accounts and none seem to be relevant because the alliance and leicester one you have to be over 21 which I am not - although OH is - but we really want me to be in charge of the money because OH knows he is not very financially savvy. The other big one mentioned in the article you have to pay in £1000 a month and I don't think we earn that between us - wouldn't want to risk it as on the calculations I have made it is either just under or only just over and if we had a month where one of us didn't get paid the usual amount due to being off sick etc it would be too risky.

The balance transfer cards article only mentions transferring debts from one card to another - we don't have any debts on cards currently so that doesn't apply. We need a card we can transfer the overdraft onto and pay back at whatever we can afford each month until it is all gone.

The other solution would be a low interest loan but I don't know how low we could keep the monthly payments. I really want to get this sorted but it's all so daunting and I don't know where to start! I thought trying for a 0% card would be a good place.

NickX

The facility to transfer funds from a Credit Card to a Bank Account (to pay off an overdraft) is known as Super Balance Transfer (SBT).

Only a few rather special cards have this facility including Egg, Egg Money, Post Office Card and any card administered by MBNA (inclduing the Virgin range of cards).

In addition MINT periodically issue Credit Card Cheques that can be paid into a Bank Account at Balance Transfer rates. However this is the least satisfactory option because the cheques cannot be ordered and, unless the are already in your possession, you never know precisely when they will drop through the letterbox.

foreversomeday

Thanks for the information, that is very helpful. Knowing the specific term for it makes it a lot easier to search.

NickX

foreversomeday wrote: »

Thanks for the information, that is very helpful. Knowing the specific term for it makes it a lot easier to search.

No problems with the info.

Just a warning though "Super Balance Transfer" is a term coined by Martin Lewis and is not recognised by the Card Companies themselves.

If you do wish to action a "Super Balance Transfer" you call them up and request a Balance Transfer to pay off an overdraft

foreversomeday

NickX wrote: »

No problems with the info.

Just a warning though "Super Balance Transfer" is a term coined by Martin Lewis and is not recognised by the Card Companies themselves.

If you do wish to action a "Super Balance Transfer" you call them up and request a Balance Transfer to pay off an overdraft

Thanks for that. Decided to go with the Post office one as it has a 0% deal on BT's for 10 months, and phoned them up to check it was suitable on their freephone helpline! :money:Very useful.

YorkshireBoy

foreversomeday wrote: »

Decided to go with the Post office one as it has a 0% deal on BT's for 10 months

If you haven't yet applied, consider the Virgin Money card. The fee is a little higher at 2.98%, but you'll get an extra 5 months 0%.

Whichever card you go for, be sure NOT to use it for purchases.

not_loaded

Maybe I’m being a bit dim here, but I thought overdraft debt was (in general) cheaper than credit card debt? Plus with overdraft the debt can float up and down (as your account balance normally would do) thus minimising the interest calculation each month.

I mention this mainly as there would probably be a balance transfer fee of 1% or 2% for a super BT and for a reasonable amount of overdraft that might make it cheaper just to leave the debt where it is?

I asked a question along these lines on the Loans forum which unfortunately didn’t get answered, it just went off on a couple of tangents.

NickX

not_loaded wrote: »

Maybe I’m being a bit dim here, but I thought overdraft debt was (in general) cheaper than credit card debt? Plus with overdraft the debt can float up and down (as your account balance normally would do) thus minimising the interest calculation each month.

Well the accepted way of comparing debts is to compare the APR which is the annualized rate of interest that you are being charged.

I agree that the standard variable rate on a Credit Card could well be more than the APR on an overdraft, however if the Credit Card has a 0% promotion on Balance Transfers then this is much less than the APR on most overdrafts (even taking into account up to 3% Balance Transfer fee).

Having said that, there are some 0% overdraft deals around, in which case paying a Balance Transfer fee to move to a Credit Card would be foolish.

YorkshireBoy

not_loaded wrote: »

I thought overdraft debt was (in general) cheaper than credit card debt?

I'm not sure you can generalise, since there are very cheap and very dear examples of both types of debt.

Plus with overdraft the debt can float up and down (as your account balance normally would do) thus minimising the interest calculation each month.

Absolutely correct, and with correct timing of DD's and other regular outgoing payments each month, ie just before payday, this debit interest can be kept to a minimum.

I mention this mainly as there would probably be a balance transfer fee of 1% or 2% for a super BT and for a reasonable amount of overdraft that might make it cheaper just to leave the debt where it is?

But some of the highest overdraft rates will be 1-2% per month, so the cost of transferring could be recovered after the first month.

Where people could fall down though is in the servicing of the new credit card debt. For example, as your salary hits your account the overdraft is 'serviced' each month and you keep the wolves at bay. However, if the overdraft is switched to a credit card, then the card could demand a monthly servicing fee (ie the minimum payment) of 2-3%. Now if people delve into the overdraft to find this, then little has been achieved.