should i use alliance and leicester to pay of current overdraft?

clairemca

i've noticed that the alliance and leicester account has a pretty good overdraft deal at the mo - 0% interest for 12 months.

i'm currently £700 overdrawn on my current account with HSBC (left over from student days) and whilst i'm trying to pay it off at £100 a month it's a real struggle. if i effectively transferred the overdraft to the alliance and leicester account by taking out the cash from alliance and leicester and paying it into the hsbc account to clear the hsbc overdraft that'll give me longer to pay the overdraft off...(12 months)

does that sound do-able? am i being a bit naive and missing something obvious here? also, are there any negatives about opening another account....credit ratings etc (sorry i'm a bit of a newb when it comes to personal finances).

thanks!

claire

7sefton

No that's absolutely fine. It is saving you money because you obviously aren't paying HSBC's debit interest rate. Now maybe close that account to concentrate on your A&L one, gradually reducing the overdraft... but because you now have 12 months breathing space, you can afford to do it less drastically than £100 per month. If you succeed, you will be overdraft free in a year, and no worse off!

clairemca

thanks 7sefton. do you (or anyone else) know if there are any negatives about leaving a bank that you have been with for a while? i've been a HSBC customer for over 7 years...will it affect my ability to take out loans/get mortgages if i change banks e.g. might HSBC be more credit friendly to me because i've been a customer of theirs for a while, but that privaledge will be lost if i change banks...?

NewbieMoneySaver**

I have changed to A&L over a year go and had that deal then. It now only costs £5/month for the overdraft that I'm using. Great.

I'm sure though that you have to have money going in there of £1000/month to have that deal.

I changed from lloyds and have had no problems getting any new credit. It's all on an individual basis though I suppose.

7sefton

Having a long and stable relationship with a bank isn't as important as it used to be, and there is now a lot more movement in the market. However, some lenders may use it as a minor aspect of your credit rating. But as long as you keep on top of other accounts (i.e. always paing your credit cards, not being constantly in your overdraft without reducing it) this should not be a problem.

masonic

NewbieMoneySaver** wrote: »

I'm sure though that you have to have money going in there of £1000/month to have that deal.

There's an underfunding fee of £5 per month if you don't credit the account with £500 per month from a non-A&L account.