clear Overdraft with 0% Credit Card Intro

rich0148

Hi,

I have a 2000 pound overdraft @ 12% with Cahoot which I pay every month a fixed amount of 50 pounds into. Now the interest on this is high, so is it feasable to take out a Credit Card that has an intro offer of 0% for 9 months and transfer the overdraft to the card to save on paying interest?

By my reckoning, it will save me quite a bit as long as I dont leave the money in the credit card after 9 months. In addition, I do not know how I would/could transfer the overdraft onto the card.

Thanks

Martinslovechild

Rich,

Yes - go for it.  If you start off with an Egg Card, you can use their Balance Transfer facility to pay off overdrafts and loans as well as Credit Cards.

I would recommend that you continue to pay the £50 per month and DO NOT - repeat DO NOT - spend on the Egg Card, else you'll find yourself right back in a big mess - in fact, cut it up or put it in the freezer or something.

Currently, Egg are offering 0% interest until 1 September 2005 on balance transfers.

Which means that if you apply for another 0% card around the end of July, you should then be able to transfer the Egg balance onto the next card, until eventually, the whole lot's paid off, all at 0%.

Once you've done the first transfer to Egg - log into your Cahoot account, select Account Manager and request a lower overdraft limit (£500 say) to remove all temptation - that's the biggest hurdle when you're trying to clear debt.

You can apply for an Egg Card here

Good Luck.

rich0148

Thanks ever so much. Could I not be onto something here? I know that the key word is discipline and not allowing yourself to spend, but as I see it, this could be an option for many who have a regular overdraft charging interest. The main thing, as you say, is keep control of it.

Thanks again

Rich

Martinslovechild

Could I not be onto something here?  As I see it, this could be an option for many who have a regular overdraft charging interest.

You're absolutely correct Rich.  The problem with 99.99% of people is lethargy.  When it comes to personal finance, most people aren't interested or don't want to hear what you've got to say.  Of all the people whom i've tried to convince to do something similar to this, exactly ZERO have taken my suggestions up! (apart from my Dad that is, whom after a lot of persuasion, eventually switched his gas & electricity to a cheaper supplier saving him over £150 per year).

I really don't know why people are like they are.  That's probably why there'll never be a shortage of candidates for programmes like 'Your Money or Your Life'...

Good Luck.

deemy2004

The next stage after saving money on your overdraft transfer to a 0% card is to start earning money

I.e. Earning £100 a month or £1.2k a year is achievable by most people in employment from cards alone !

Throw in the rest and it soon mounts up to several thousand in savings and earnings a year.

rich0148

Deem,

Not too sure what you mean - could you please enlighten this novice!

Ta

Rich

deemy2004

Its called stoozing , see the credit card forum for zillions of posts, but briefly

You Transfer a 0% balance to your current account then to a savings account and thus EARN interest on the balance transferred.

Then before the period of the 0% offer is up, you balance transfert the debt to another 0% card,obviously if you can't get one you have to pay off the debt , but by then youve earned £x in interest.

As a guide £20k stoozed @ 5% would earn you £1k per year.

Some have over £80k stoozed, but the majority are less than £30k, which would still equate to £1500 per year.

I use stoozing as a cashflow for savings and investments, i.e. I wanted to fix the high interest rates from Aug to Oct 04 so applied for alot of credit, bunged it into the fixed deals, then as they approach the end of the 0% periods either pay off from new savings or shift the debt on.

As an example say its March 05, and you want to invest in an Cash ISA and don't have the cash. Get the £3k from the 0% cards, bung it into a cash-isa then build up a savings pool to repay the £3k borrowed over the term of the 0% offer, with the probability that you may be able to shift most or all of the debt anyway thus enabling you to repeat on any other high interest deals.

This will engender a savings & money earning ethos, that once it takes hold of you takes complete control...... where you see opportunities and possibilities EVERYWHERE ;D

Walletwatch

This will engender a savings & money earning ethos, that once it takes hold of you takes complete control...... where you see opportunities and possibilities EVERYWHERE  ;D

very poetic...

To continue the script..

... and this will herald the age of the stoozer, the tart who misses not an opportunity to squeeze that extra pound of flesh from the big corporations, Goliaths of the Banking industry...

Will pass the baton to a volunteer here, I guess..

rich0148

Deemy,

Thanks very much - very enlightening. but how do you get the money off the credit card and into your regular account?

The rest makes sense and and basically, you just have to ensure you don't forget your due dates.

Thanks

Rich

Martinslovechild

Rich,

Check out https://www.stoozing.com for full details of how to do this. Basically, keep the Egg Card after you've done the initial BT with them and moved the cash on elsewhere - this is the most important weapon in a Stoozer's armoury and will be used to allow the transfer of cash from other cards which don't allow direct transfers into your account to transfer cash into your account via Egg.

MLC.

deemy2004

As above..

Use your egg card as an aptly named Super Balance Transfer card, which allows you to use it as a staging post for balance transfers from 0% cards to your current account and on to savings accounts.

For example -

TSB 0% card £5k transfered to Egg Card transfered to current account transfered to savings account.

As a continuation of the ethos ..... embark on this road and one day you'l wake up and think bloody ell.... I'm rich !  ;D

Key way points along the way are -
1. Clearing all your debt, (none mortgage).
2. Clearing or offsetting your whole mortgage from stoozing / savings.
3. Earning more in interest on your savings than you spend. Thus the whole of your income is surplus and goes back into savings.
4. Earning more in interest on savings compound by 3% more than you spend - Now this is near impossible to achieve but a good goal nonetheless.

P.S. I am at stage 3