Overdraft V Credit Card Balance *

YorkshireBoy

Charliebird wrote: »

I will leave the overdraft alone!!!!

Just to add, my advice would have been different had you been (really ) employed and having a reasonable salary paid into the current account each month.

I'd probably have then used the overdraft, and shifted my bills back to a couple of days before monthly pay day. That way, the debit interest incurred each month would have been 'significantly' less than the corresponding amount on the credit card, rather than 'just a bit' less...as I suspect it would be with your current situation.

Charliebird

Ok so I am a bit confused on your last post. So to put my cards on the table I get £2K in my Bank account each month as my "salary" a lot of expenses come out of that - childcare, food bill, householdy stuff but on a pay as you go basis. DDebits outside of the credit card total £285 ...so in that case what would you do! (I appreciate its your opinion and not holding you to anything!!)

YorkshireBoy

If you used £4K of your overdraft to settle the card(s) your average balance in the current account wouldn't be £4K overdrawn.

The balance would fluctuate between £2K and £4K overdrawn over the month. Assuming you spend the money linearly over the month your average balance will be £3K overdrawn. You are now comparing debit interest on £3K with credit card interest on £4K, and this tips the balance in favour of using the overdraft.

If you can move all your bills back to the day before 'pay day' then your average current account balance will be £2K overdrawn...even better as you've now just halved your monthly interest charges!!

Once you've settled the credit card bill, using that - rather than current account funds - for your day to day essentials means you can make use of the 56 day interest free period and keep even more money in the current account.

Make sense?

Just a tip for the future...you can't put too much detail in your OP.

Charliebird

Just thought I'd update you - being new to all of this balance transfer lark - I decided to call all of my other credit cards (that have zero balances :-) ) and see what they have on offer! I discovered am entitled to some 0% balance transfers for 6 months so I will do that instead of using the O/Draft. Don't know why I thought balance transfers were only available when you opened the card!!
Yorkshire Boy - thanks you so much for your insight and advice - you are invaluable!!!

CannyJock

Remember there are fees for the balance transfer, but still better than £4000 at 17.7% APR

6 months is quite short too so worth putting a note in the diary to find somewhere else to move the balance to before the 6 months is up to try and avoid reverting to their standard interest.

Oh yeah, and with a regular £2000 per month into your current account that you then use over the month to pay things down - make sure you're getting good interest on the account - A&L are doing 6% on the first £2500 in your current account at the moment, same with Abbey - I've got one of each