Overdraft/credit card or loan ?

soxxxxy

Hi all,I need help with my debts,cant decide how best to deal with it !! Our overdraft is currently up to £3,500 and try as i might everytime i get it down a bit something else happens .Normally when times are bad we just ride out the storm and within a few months we are back in the black,but this time it hasnt happened.I have reassesed our finances and cut back on unnecessary spending and would love to start afresh but not sure that this would be the best option.What i would like to know is ,would you transfer to 0% cc,take out a loan or just keep chipping away at the overdraft ? We have no savings but we do overpay on our mortgage by £200 which could be used towards the debt.

david_hellier

We could help you more if you post your SOA. See sticky. Reduction of ods needs a budget.

Paying off the od using a cc is not recommended; it will only result in more debt

soxxxxy

Thanks for the reply David.I have done a budget check and can see if we stop the overpayments on the mortgage for 12 months this will considerably reduce my debt.Also a few of my outgoings will be stopped in the next month or two so will post an an updated budget plan then.I think if we just ride it out for the next few months we should be ok.It is so worrying that we have the overdraft debt for me as we have never been in debt before,we dont have cc debt or loans so i guess i should be happy that i can tackle this debt and be back on track in the next 12 months.Today i have just been looking at my house/contents insurance of £640 and can see that this bill can be reduced by £400 :eek:cant believe didnt shop around before :mad:
So by stopping the op and changing insurance my debt will be down £2800 ,the kids finish college this month apart from their exam days so will save an additional £160 a month saved on bus fares.If my maths is correct my debt should be cleared in less than 12 months fingers crossed.:j

Tixy

If you can clear it in 12months then a loan isn't likely to be the cheapest option.
You could consider trying to get a 0% super transfer credit card to transfer the loan to. Whether you would be likely to get such a card with that offer with a high enough credit limit might be difficult (and only a few cards offer SBTs where you can put money into a current account).

Plus you'd need to weigh up the cost of that (which can be up to 4% transfer fee) to how much you are likely to pay on the overdraft if you keep with it as it is (as presumably during the month the balance fluctuates to a lot less than £3.5k once your salaries are paid in etc?)

soxxxxy

Thanks for the reply Tixy.I have ruled out getting a loan but i am still considering 0% cc We have been offered one from the bank so i will mull it over for a few days,even with a transfer fee it would be cheaper than the monthly interest i have just paid ( £47 ):eek: I have also been through my direct debits today and found 2 that i have no idea what they are for, so i am off to the bank tomorrow to investigate.,and will probably cancel them so more money saved i hope.

Tixy

Chances are the 0% card your bank would offer won't allow you to pay off the overdraft. The only cards that allow super balance transfers are those listed here - http://www.stoozing.com/sbt.php
Aside from those cards you would need to look for a 0% purchase card and instead slow stooze by putting your normal monthly spending on the credit card for a few months and therefore spending less from your current account so reducing your overdraft. Going for this option does require a lot of self-control and budgeting to ensure you don't end up overspending and with an overdraft and card balance at the end and further in debt.

soxxxxy

Thanks again Tixy,think hubby and I need to do a bit more homework on this, will look into it at the weekend when he is home.

soxxxxy

Just cancelled my previous home insurance and they didnt charge me a cancellation fee so thats a bonus.Off to sort out some other DD at the bank now .