Pay off overdraft with credit card

toastyteacake

Hello,

I was watching Daybreak on Friday morning before work and heard the lovely Martin talking about transferring debt from a bank to a credit card.

Here's the history: I've got a £200 limit on a capital one card - which I pay off £40 a month on (and then end up spending it again!). I have had this for 6 months now.
I also have a £300 overdraft that is charging me £25 for the priviledge every month. My capital one card only has a few quid worth of interest, so I'm not too worried about that. But obviously my HSBC account needs sorting!

Is there any way to get another credit card and transfer all my debt over to it? Can you transfer overdrafts to it? I know that sounds odd... and I probably heart Martin wrong!

Just really need to cut down the debt... £100 to hsbc in charges in 4 months is just not good!

Any advice greatly appreciated. I've looked at 0% cards, and just wanted some guidance.

Thanks :j

mrsp80

You need to open a new credit card that is offering a 0% rate for a certain period of time, and which has a low charge for balance transfers (see here: http://www.moneysavingexpert.com/cards/balance-transfer-credit-cards - this will tell you all you need to know!).

Just make sure:

- the balance transfer fee isn't going to cost you more than your overdraft charges
- you pay off the balance before the 0% period ends.

Good luck!

CLAPTON

almost any CC will be cheaper than £25 a month from HSBC (assuming that is an accurate figure); simply use it for spending and avoid using the overdraft.
obviously one at 0% for a period would be good, but that would depend upon your credit rating and general financial circumstances


however that won't help you much unless you address why you are spending more than your earn

post up a full budget
format here http://www.makesenseofcards.com/soacalc.html



you need to desperately reduce you spending or increase your income (maybe part time job) so that you can clear the OD and the credit cards

toastyteacake

Thanks for all your advice!

This short term lack of money will end in January when my pay goes up (just started a new job and will be on Perm contract end of Dec). I used to do part time work, and I started this new full time job... It seems that extra few hundred went to my head and I majorly overspent. I just need to start paying it back... and cutting out the extra unneccessary spending and charges!

Sorry if this sounds stupid (i'm still getting used to all of this).... So I just use the credit card rather than the overdraft? I can't transfer money from the credit card to the bank...? Apologies again if it's a silly question!

CLAPTON

well, there are only very few credit card that allow you to balance transfer (BT) to a bank a/c; the MBNA stable used to allow this but MBNA no longer market their own brand but Virgin still offer this facility

however, simply using a CC for 'normal' shopping will mean you spend less using your current account so you can avoid using the overdraft

but as I said whether you will get a 0% card or indeed any card depends upon your credit rating etc.

mrsp80

You could transfer money from your credit card to your bank account, but this is a balance transfer, and they will charge you a % fee to do the transfer (even if the interest rate is 0%).

What the other poster is suggesting is that when your salary goes into your bank account it obviously pays off or chips away at the overdraft.

If you are using a 0% credit card for your normal spending then you don't have to go back into your overdraft - leave your salary in the bank account for as long as possible.

But make sure you save to pay off the credit card before the 0% interest deal ends, otherwise you will end up being charged horrible interest rates!

YorkshireBoy

toastyteacake wrote: »

I also have a £300 overdraft that is charging me £25 for the priviledge every month...obviously my HSBC account needs sorting!

HSBC charge 19.9% EAR on their overdrafts, which would equate to around £4.50 if you were £300 overdrawn for the entire month (and most people aren't).

Is the £25 a fee for making an informal overdraft request...each and every month? If so, you may find that this is reflected on your credit report and could affect your planned credit card application.

toastyteacake

No, it's an arranged overdraft.. but I'll have to check my account and check what they call the payment. Very helpful though... Didn't know that could affect the credit card application! Thank you!