Overdraft Management with moving banks

karmachilovething

So I have been a customer with Barclays forever, althrough student year and 3 beyond. I still have a big overdraft with them (£2300) which I move up and down through in a month, but I haven't been in the black since 2000 :eek:

But I would like to move banks. Beside the fact that on a number of occasions Barclays customer service has not been great, I think that starting with a clean sheet will help my money management.

So I'm thinking a three step process:
1) apply for 0% spending credit card
2) Open new bank account (probably with First Direct from reading the main site page)
3) Use credit card for spending and use the cash to pay off the overdraft in old account

So I welcome comments on whether this is a good plan or a daft one (just moving the money around?) ? Is there a better way of doing it? Has anybody had problems with an existing account where you no longer have your salary paid in and they close your account and demand the balance?

Thanks
Karma-chi

KingElvis

To use a credit card to pay off an overdraft you'll need a super balance transfer card and these can be difficult to get unless you have a very good rating.

premierfella

Assuming you have the discipline to maintain your money management effectively, it is a plan (but a risky one in my opinion).

By effectively, I mean that you WILL actually seek to pay off the overdraft in a regular and disciplined fashion and not simply end up in x number of month's time with the same £2300 overdraft PLUS a credit card balance, or alternatively a balance in excess of £2300 on the credit card (that is a BIG if - a lot of people find that they have the best of intentions and a plan similar to yours, but fail in its implementation and end up worse off).

As you suspect I think, Barclays will likely quickly look to cancel your overdraft facility if the deposits into the Barclays account suddenly take a nosedive. If you really follow this plan of using a 0% spending credit card, you might be better off sticking with Barclays for a while yet whilst you cut the overdraft to a level which other banks will be more likely to approve.

CLAPTON

what happens at the end of the 0% free period?
do you expect to have paid the full 2,300 off (given that you haven't done that during the last 3 years.
the APR of the CC may well be much higher than the overdraft once the 0% period is over

karmachilovething

Thanks for all the thoughts.

I think you are all right, it's too risky. And there are a lot of if's.

Also I'm doing it for the wrong reasons - to FEEL debt free. And that's not the point, it's to BE debt free.

So I'll stick with Barclays for now. And knuckle down to some proper MSE stuff!