Overdraft V Credit Card Balance *

Charliebird

Firstly huge apology if I've posted this in the wrong bit - its just it falls into serveral camps! (So I have posted this in two areas sorry!)

I have just over £4000.00 on my credit card and I am trying to pay off about £400.00 per month to get this down to a more manageable level. However I am just wondering if I am better off paying off the balance with my bank overdraft (which I have one for £5000.00) Apparantly the APR is 17.7% so if I am not completly thick should mean less interest a month.

I am sure many of you will be screaming at me that I am better off balance transfering - which I would. But actually I don't work. I am a Mum at home and my hubby gives me a "salary" each month (paid into my bank account) so when I have applied for credit cards in the past - because I don't work they wont give me one!

So here is another question - if I pretend that I do work - is that fraud??? Are there some credit card companies that more acceptable for Mums at home.

My hubby and I have always run our seperate finances - its how I like it - so I don't really want to go down the route of joint credit cars.

Thanks for your help!

Charlie

Poolie

Pay off the overdraft first. The bank could come along at any time and request that amount back.

Arrange a direct debit on your credit card to pay the minimum each month for the moment and pay everything else to the overdraft.

As you pay the overdraft off as the bank to reduce it. For example when you pay £400 off the overdraft ask the bank to reduce by the same amount so you don't have the temptation to use it again.

Charliebird

Hi Poolie


Sorry If I confused you - I don't have an overdraft currently - I have an £5K overdraft facility - and the question is should I use that to pay for the credit card balance off - and in theory pay off the amount quicker as the interest is less?

PNPSUKNET

Whats your cards apr?

YorkshireBoy

Charliebird wrote: »

So here is another question - if I pretend that I do work - is that fraud???

Yes it is. If you're found out (and you probably will be), you'll likely get a CIFAS marker. This will trash your credit rating, and that of anyone else financially linked to you...ie your husband through the mortgage, loan, or any joint current account you share.

Are there some credit card companies that more acceptable for Mums at home.

M&S in-store application forms used to ask for household income only. You'd probably still have to give your (truthful) occupation though.

...so I don't really want to go down the route of joint credit cars.

That's handy, because there aren't any! Only the primary cardholder has responsibility for any debt placed on the card.

On your should I/shouldn't I question...

Overdrafts are repayable on demand. Credit cards aren't.
If you clear the card to zero, the card provider may cut your limit drastically. If they do that, and the bank wants their money back, you may have a problem.


Some personal questions...is hubby aware of your credit card debt, or are you trying to keep it a secret? Has it been run up with household expenses? If so, he should help out surely? Why not ask him to apply for a card and shift your debt to that? Then you simply pay him the £400 back each month. Easy?

Poolie

Sorry CharlieBird.

If the interest rate on your credit card is higher than your overdraft then I would certainly be looking at paying off your credit card. If is lower then I would be looking at getting rid of or reducing the overdraft limit you have to reduce temptation.

YorkshireBoy

Poolie wrote: »

...I would be looking at getting rid of or reducing the overdraft limit you have to reduce temptation.

She has a £5,000 facility she isn't using. Looks like she's not the type to succumb to temptation. I'd be leaving that facility in place for emergencies (such as this).

Poolie

Yorkshire Boy

I would be getting rid of the overdraft as I would allow her access to possible lower rates and balance transfers.

If she doesn't need it use it why have it.

CannyJock

YorkshireBoy wrote: »

You'd probably still have to give your (truthful) occupation though.

Don't say Mum, say Domestic Engineer.

YB's suggestion of getting husband to apply for 0% card to move the debt onto works out best in pounds and pence, then you pay the credit card. You'll pay a 3% fee, roughly £120, and at £400 per month it'll be comfortably cleared within 11 months with no further interest.

It also leaves the impressively large overdraft facility in place for emergencies.

Reducing the overdraft would have been the traditional advice, but I'm leaning towards reduced credit limits and reduced overdraft being viewed negatively nowadays - lenders can't tell if you requested it or if others have reduced it as you're a risk.

EDIT: And as I've found out the hard way, trying to get a credit limit raised back to it's original level even though you were the one who requested it is nigh on impossible

YorkshireBoy

Poolie wrote: »

Yorkshire Boy

I would be getting rid of the overdraft as I would allow her access to possible lower rates and balance transfers.

As a SAHM, those options are unlikely to be available to her anyway.

If she doesn't need it use it why have it.

Already answered...emergencies. Banks are cutting back on overdraft facilities, and the chances are she'll never get that £5K back again...even if/when she starts work again. For example, I have unused facilities totalling £8K across two accounts with the same provider. They've just written to me to tell me they're reducing them to less than £1,000. I'm appealing, but don't hold out much hope...even though I've been with them 30 years and have an impeccable history.

Charliebird

Thanks folks - great advice! I will stick to paying off the credit card as is and talk to hubby about balance transfers card. It just irratates me as I manage my own money and he his and because I've decided to take a career break I can't get credit in my own right! Despite being "employed" by my husband as a Domestic goddess (lol) I realise this is my issue to hold on to some idependance - but it sucks - perhaps if I get a little job - I can then apply as technically I'm employed!!

Thanks for everyones help! I will leave the overdraft alone!!!!

Charlie