Old Student Overdrafts vs. Credit Cards

Unjaded

Hi everyone,

Firstly just want to say great site & looks like a great community here on the forums too. I've learnt a lot just by reading around & already have saved plenty.

However I was wondering if I could mine the knowledge here further in relation to my old student overdrafts that simply won't leave me be.

Despite working for the last year in a fairly well paying job (before being let go last week!), I still have overdrafts totalling £6,800 from my student years. Of this, Halifax & Smile have started charging me on £4,400 of this. Smile seem to have a set charge while Halifax are charging me £2 a day!

As there are various criteria behind this, I am of course shuffling money around to ensure I don't get charged over my unauthorised limit & get charged again, & also in the case of Halifax that overdrafts of £2,500 or less only get charged at £1 a day instead of the £2.

What i'd like to ask you all is there any way I could get a credit card & transfer the debt i'm getting charged on, over to a credit card & so close the Smile & Halifax accounts?

Sorry if this has already been covered elsewhere or is a simple question, but don't want to do anything without being properly informed.

Many thanks,

Unjaded

pinkarsenalprincess

You can do it through a super balance transer, which is limited to only a few cards. However, you may find that you aren't able to get a high enough limit to clear the overdrafts.
I did a SBT recently to clear 2 overdrafts, moving them onto a 0% card with MBNA. The credit limit offered to me was £5K.

Bear in mind there will also be a fee and you really need to aim to pay the balance off in full before the promotional period ends. Add to that needing to close the overdrafts so that you don't get into the same mess again with a credit card debt on top of it.

Hax

From reading your post, it sounds like you've just lost your job. Is this correct? If so, then it's highly unlikely that you will be able to get a credit card of any form without having an income to make the repayments.

Also, you need to look at your finances and work out why you are still in your overdrafts (or exceeding them as you imply) - otherwise, when you find a new job, you're likely to keep spending at the same rate, probably increasing your debts as you do so.

EDIT: Once you do have a new job and if you can get a SBT card, then that's the best way to go. Failing that, maybe talk to your banks about converting the overdrafts into loans and then removing the overdraft facilities.

Unjaded

Hi guys,

Thanks, very useful. The SBT seems like the way to go, but as you correctly say Hax I will ensure i'll have to get a new job before taking this route.

The reason I still have them is because I have been paying off other debts from a business venture from last year that didn't go to plan. While the debt paying on that front has gone well (£11.5k in one year), the overdrafts have since been chipping away at my finances.

I am interested in what you say about loans though. If we take the Halifax example, if i'm paying £60 on a £3000 overdraft that's basically 2% but with no capital being paid off. Would a loan for £3000 at say 8% be cheaper?

Hax

Unjaded wrote: »

I am interested in what you say about loans though. If we take the Halifax example, if i'm paying £60 on a £3000 overdraft that's basically 2% but with no capital being paid off. Would a loan for £3000 at say 8% be cheaper?

It obviously depends on the period the loan is over. Also, 8% APR is probably at the best end of the scale - you may be looking at something closer to 12% (or possibly more).

There's a loan calculator here: clicky-clicky

Have a play with the figures and see what comes out. For example, £3,000 @ 12% over 60 months works out at £66.73/month

So, whilst it's a long time and slightly more than your overdraft charges you would at least be clearing the amount and will have removed the temptation to dip back into your overdraft.

The other thing to bear in mind is that the Halifax charges drop to £1/day when you get the O/D balance below £2,000 (IIRC!).

It really is hard to know what to say without knowing the full details of your accounts and what money you have "free" to throw at your debts - then again, that information will be unavailable until you find your nest job.

It's probably worth addressing this once you have a new job and can get a clearer picture of your income vs outgoings.

Meanwhile, are you able to continue to service your debts whilst you're looking for a new job?

Unjaded

Hax wrote: »

The other thing to bear in mind is that the Halifax charges drop to £1/day when you get the O/D balance below £2,000 (IIRC!).

It's probably worth addressing this once you have a new job and can get a clearer picture of your income vs outgoings.

Meanwhile, are you able to continue to service your debts whilst you're looking for a new job?

Just so everyone knows, it drops down to £1 a day with Halifax O/D's for balances no more than £2,500.

Agreed, I will look at this again when I have a job. Can appreciate where you're coming from reagrding a loan but I think the SBT is the right choice at that point though.

Thanks for your input!