Help! Best way to pay off 2 overdraughts??

MrGunner

Hi, first off many appologies if i am posting this in completly the wrong place.

I was wondering if anyone could help me in deciding the best way to go about paying off 2 overdrafts on old current accounts that i no longer use.

Since moving in with my partner, we have been using a joint account that is in great shape (no savings as of yet but always in the black :beer:)

I do however have 2k of overdrafts left from my uni days in a nat-west acc that is charging me intrest ever month. in addition my partner has 1.5k of overdraft in a halifax acc that is charged £1 a day :eek:. we both want to get rid of this debt and are considering the cheapest way to do it.

I am considering taking a loan to pay both off but i have heared that could end up being an expensive way to do it. could a 0% credit card do it? im out of ideas really and you guys seem quite smart on these things.

Any help would be greatly apreciated!

Ta

Lokolo

A 0% credit card would be good. You might struggle to get one for that amount though.

However you must also realise banks can't withdraw overdrafts at any point they want to. So you stop using the account looks as though you cannot afford to pay back any of the overdraft.

Pay it off ASAP as if they withdraw it, you're left in the pits!

MrGunner

I didnt know that they could do that, so in essence they could pull my overdraft and i would end up paying charges for going beyond my limit?

Lokolo

MrGunner wrote: »

I didnt know that they could do that, so in essence they could pull my overdraft and i would end up paying charges for going beyond my limit?

Yep! Exactly.

MrGunner

damn that would not be good, cheers for the heads up!

maybe a loan would be the best way forward, just didnt want to take on any more unnecessary debt!

premierfella

Good advice above.

The length of time you would take to pay off the overdrafts (based on a realistic budget) and you and your partner's credit records might also influence your decision between 0% credit cards and a loan.

Also, bear in mind that it is not more unnecessary debt - just a transfer of existing debt to lower cost (so long as both of you do close the old current accounts with individual overdrafts facilities and do not spend on any new 0% credit cards). Think of it in the same way as transferring savings from a 0.1% rate account to a top interest paying account.

MrGunner

good point, so perhaps a 0% credit card would be best. So i would pay off the overdrafts with the card and then pay off the credit card. As it would be at 0% it would save me the intrest i pay on the accounts at the moment. Is this easy to do i wasnt aware you could pay off current accounts with a credit card?

sorrry for all the questions, im a newbioe to this money saving lark, really trying to get better tho!

Lokolo

http://www.makesenseofcards.com/soacalc.html

You could also fill in this and post it, that way you can see if theres anything you can cut down on to put more money into the debts.

premierfella

As a newbie, also remember that there are very few real 0% cards (as the majority of 0% deals charge a fee for transferring the overdraft balance to the card) - but still a much lower effective interest rate than an overdraft...

...and always set up a direct debit to make at least the minimum payment on the 0% credit card to avoid unnecessary fees and/or defaulting to the standard card rate if a payment is accidentally missed.

MrGunner

thanks for the advice!

paulmcerlean

there is a much higher chance that the overdraft will be pulled if you stop using the account regularly - if you keep funding the account, and they are getting their fees, then it will most likely remain.