Transferring existing credit card and overdraft debt to new card

fogma

Hi,

I currently have £1100 owing on a Post Office credit card. The initial 0% deal runs out on Jan 14th 2010.

I also have an overdraft limit of £2250 on my Natwest current account which is currently about £2000 overdrawn.

I am looking to transfer both these debts to a new 0% credit card and aim to pay it off within a year.

I have applied for a Virgin credit card as they offer 0% on money transfers as well as balance transfers but they have declined due to the amount owing on my current account which was the point in applying for the card!

The guy at virgin said that if I got the debt on my Natwest account down to nearer £1000 they would probably accept me. I could probably borrow this money off my girlfriend for a month so that my credit report would be updated but I'd rather not have to do this. I also don't want to keep applying for credit cards as this will reduce my rating.

I'm aware that Egg offer 0% on money transfers but again, I don't want to keep applying if they're more than likely going to use the same criteria as virgin to decline me.

Natwest have offered me a credit card with a limit of £3700 with 0% balance transfers but a 16.9% apr on any money transfers so this is good for the money owing on the credit card but no good for transferring the overdraft.

Any help on what the best way to structure this debt is would be appreciated.

Thanks J

Moggles_2

I have applied for a Virgin credit card as they offer 0% on money transfers as well as balance transfers, but they have declined due to the amount owing on my current account which was the point in applying for the card.

As you know, overdrafts are repayable on demand. Credit card debt, on the other hand, isn't. Potential lenders will pay more attention to your overdraft balance, because it's known that a similar level of debt on credit cards only requires a 2% to 3% minimum monthly payment and cannot be called in. I'd certainly pay down your overdraft and wait for this to show on credit files before submitting further cc applications.

Natwest have offered me a credit card with a limit of £3700 with 0% balance transfers but a 16.9% apr on any money transfers so this is good for the money owing on the credit card but no good for transferring the overdraft.

I'd certainly transfer what you can to Natwest. You'll still save money.

fogma

thanks for the reply,

do you know whether it be worth setting up a new premier current account with alliance and leicester and transferring my overdraft from natwest to that account as they offer 0% interest on overdrafts for the first 12 months?

Rob71

Probably be best to stay put with Natwest, and shift the debt to the credit card - you'll build up a better behaviour score with the bank, and in turn improve your credit rating.

How about, money transfer the overdraft (and then don't slip back into it!), and then apply for Virgin or whoever in 3 months?

Other thing to remember is that you might not necessarily get the same size of overdraft with the new account - that might cause more problems than it fixes.

fogma

Rob71 wrote: »

Probably be best to stay put with Natwest, and shift the debt to the credit card - you'll build up a better behaviour score with the bank, and in turn improve your credit rating.

How about, money transfer the overdraft (and then don't slip back into it!), and then apply for Virgin or whoever in 3 months?

Other thing to remember is that you might not necessarily get the same size of overdraft with the new account - that might cause more problems than it fixes.

thanks for the reply.

If I transferred my £2,000 overdraft to a natwest credit card, the interest would be around £26 per month until I paid it off plus the 2.9% transfer fee. Even if I paid off £2,000, I'd still be paying interest on the 0% balance transfer from my post office card as this would be a secondary debt.

If I got a £2,000 overdraft with alliance and leicester, I could transfer the overdraft and then remove the overdraft from my natwest account thus keeping my available credit the same but using the natwest account for day to day things therefore keeping my behaviour score?

Rob71

Hmmm....

What's the limit on the PO card if you don't mind me asking?

What interest rate/charges are you paying on your OD at the mo?

I'm trying to work out the "cheapest" way to sort it out...

No harm in getting the Natwest card whilst working out what to do next...

*EDIT*

Have you thought about a different CC - Virgin are quite strict, you might have more luck with someone else? Don't know if you could money transfer with Tescos for example (which is part of RBS like Natwest)...

fogma

Rob71 wrote: »

Hmmm....

What's the limit on the PO card if you don't mind me asking?

What interest rate/charges are you paying on your OD at the mo?

I'm trying to work out the "cheapest" way to sort it out...

No harm in getting the Natwest card whilst working out what to do next...

*EDIT*

Have you thought about a different CC - Virgin are quite strict, you might have more luck with someone else? Don't know if you could money transfer with Tescos for example (which is part of RBS like Natwest)...

the limit on the PO card is £1800
the interest rate on the OD is 17.9% I think

As I said in my original post, I've thought about applying for other cards but don't want to keep getting declined as this affects your rating I believe? I think Egg is the only other one that allows transfers to your bank account.

I've just been on the phone to the PO and they can transfer a balance to the bank account I used when I signed up so here's my theory of what to do.

transfer £1088 balance from post office card to natwest card @ 2.9% = £31.55
transfer £1600 balance (£200 less than credit limit on PO card) from natwest account to post office card @ 2.98% = £47.68
transfer £1600 balance from post office card to natwest card @ 2.9% = £46.40

leaving £2688 balance on natwest card and clearing £1600 of my overdraft.


how does that sound???

Rob71

That sounds pretty good tbh - you'll be better off in the long run, and you're saving on charges/interest... :beer:

Will you reduce your OD limit once you've cleared the 1600? Probably looks better on your record, and removes the temptation to rack it up again...

This time next year you'll be wondering why you didn't do it sooner!

fogma wrote: »

I think Egg is the only other one that allows transfers to your bank account.

Look at MBNA (not Virgin) - say play.com card?

Oh, and don't forget you can 0% balance transfer back onto the PO card on the 1st/2nd anniversary the account opened...

fogma

Rob71 wrote: »

That sounds pretty good tbh - you'll be better off in the long run, and you're saving on charges/interest... :beer:

Will you reduce your OD limit once you've cleared the 1600? Probably looks better on your record, and removes the temptation to rack it up again...

This time next year you'll be wondering why you didn't do it sooner!

Look at MBNA (not Virgin) - say play.com card?

Oh, and don't forget you can 0% balance transfer back onto the PO card on the 1st/2nd anniversary the account opened...

Virgin is part of the mbna group isn't it? I know they'll probably look at your application slightly differently to virgin but surely if I keep getting declined for a card with the same group it won't help my rating and chances of getting one further down the line?

Can you explain what you mean about a 0% transfer on the 1st anniversary of my PO card? I'll have had the card a year on 22nd December.

Rob71

MBNA run cards for loads of people, including Virgin and Play, but different cards will have different credit scoring requirements - like you said though, they've declined you once so when the OD is cleared, try again and you should be fine (though there's no point if you've got debt tied up @ 0% for the next year).

The fact that Natwest are happy to give you a £3700 limit points to the fact you're not a complete lost cause!

As for the PO card, you get 12months 0% for the 1st year. Then on the 22nd you'll be eligible for another 5 months 0% on new balance transfers, and again (for the final time) on the 22nd of next year.

Another thing: just pay the minimum balance each month, but save enough to clear it at the end of the year (if possible), like that you'll get paid interest rather than owing it.

Just work out the best way to bounce everything between cards/current/savings account and you should be debt free in no time...