Using overdraft to pay off credit card?

CA9

Hello all,

I would really appreciate any advice that anyone might have to give on a situation that I am currently mulling over.

Six months ago I decided to attack the debt that was building up on my two credit cards (Barclaycard @ 24.9% and Virgin @ 35%) as well the fact that my current account was £1500 overdrawn and would soon move from having been interest-free to a standard rate of 19.3% EAR.

Since then, with the help of this wonderful site, I have managed to pay off the Virgin Credit Card, and have requested closure of the account. I also opened an Alliance & Leicester account to make use of the interest-free overdraft (and this has reached its limit - will need to get this back in the black by the end of this year).

I now find myself with a balance of £1380 on the Barclaycard (now at 25.9%), and am £600 in the black with my original current account (19.3%). As I know Martin recommends getting rid of the higher debt first, I am wondering if I should make use of the £2100 (including overdraft facility) in my bank to pay off the credit card immediately.

A key point here is that, having moved back with my parents temporarily, I have very few outgoings. However, I am in between jobs - with a very strong chance I'll be back in employment at the beginning of Feb and a paycheck at the end of that month.

Do people think it is worth avoiding the compound interest and slightly lower level of interest and paying off the card immediately? I am tempted to do this, and am aware that I could at least take advantage of the 56 interest free period on my credit card in the event of any purchases that would need to be made (e.g. ridiculous train season tickets) and that I should be able to pay off before those 56 days are up.

Any kind advice would be much appreciated.

C

p.s. forgot to say, I did apply for another card (for a balance transfer), but got rejected, and although I am aware of the 6.9% offer at Barclaycard, it did not make sense to transfer to the Virgin card and back again. I decided to close the Virgin card to help with any applications further down the line, and to be able to take advantage of MBNA new customer offers.

morocha

Hi op i am in a similar position. First i tried to get a credit card with 0% in balance tranfers for a year so i can pay it off as soon as i can. No chance, i can not get one like that.
Second now, i tried to increase my overdraft limit so i can pay it off quickly, my credit card cost me around £10 in interest each month.and i just want to have my debt in just one place at the moment. i am trying to get rid of my tesco credit card too.. but the limit in this one is low so i can not balance tranfer.

CannyJock

CA9 wrote: »

Since then, with the help of this wonderful site, I have managed to pay off the Virgin Credit Card, and have requested closure of the account.

Pity they didn't make you an offer to keep you as a customer once you cleared the balance - not heard many success stories of "repeat" deals from Virgin recently, they used to be famous for them

CA9 wrote: »

Barclaycard £1380 @ 25.9% APR
Overdraft 19.3% APR

Yup, definitely clear the card in full to shift the debt onto a lower rate of interest (assuming no additional O/D fees?). There will be residual interest the following month that will need to be paid unless you make an "overpayment" to the card to bring it to a nil balance once your next amount of interest is added on. Once you get a nil balance statement, you're back to square one and can use the card for normal purchases and pay in full to get your 56 days credit back again which should help with the overdraft.

CA9

CannyJock wrote: »

Pity they didn't make you an offer to keep you as a customer once you cleared the balance - not heard many success stories of "repeat" deals from Virgin recently, they used to be famous for them

Yes indeed - when I called up to cancel it was an automated process that resulted in me being told the account would be closed in 7 days. I have not had any calls from them since. Oh well!

Many thanks for your thoughts, with which I agree!

CannyJock

Before cancelling my last Virgin card I phoned them every month over a 6 month period to check for any offers before finally giving up and cancelling the card. Didn't come across an automated option on their phone menu - or do you mean they CS people were only too eager to cancel at the first mention of the word?

If you get into a repeat offer discussion and it doesn't seem to be going anywhere, the trick is to ask to speak to someone in their retentions department and if they seem reluctant to transfer you, call them directly (MBNA - 0800 783 1116 - courtesy of YorkshireBoy).

Occasionally they'll offer to close the account for you but you need to be insistent that you want to speak to someone in their retentions team. If after speaking to someone in retentions they're not interested in keeping you then you wave bye bye to them.