Using an overdraft to pay off cc debt?

AlexInDebt

Hi All,

I am new to this forum and is on a mission to clear my debt. Being a full time worker on minimum wage I am struggling to pay off all my debt and pay my day to day family bills.

However, my Capital One credit card has nearly £1150 to be paid off and my interest is a whopping 34%. It would be nice to get this down so that I can pay it off. I have cut the cards in half and lowered my credit limit.

I was thinking......

My RBS bank account only charges me 19% for an overdraft of up to £1500. I have a £50 overdraft already and thinking of maxing my overdraft to £1200 to pay off my credit card. This way I would effectively only be paying 19% and would save me a massive 15% in interest. I hope to pay off more than the minimum each month to get this horrid card down.

Is this a good idea?

I really need an opinion on this.

Thanks.

Alex

DominicJ_2

From the information you gave, yes, that sounds like a reasonable idea.

[Deleted User]

However, there is the risk that an overdraft can be called in at any time.

AlexInDebt

However, there is the risk that an overdraft can be called in at any time

Is this something that many people experience? Are there factors that are likely to cause the recall?

Surely, if you are paying off the OD with regular deposits, then surely the risk would be lower?

Thanks for all your replies.

Alex

steve1980

As long as you're paying in a decent amount of money each month then it shouldn't be a problem.

AlexInDebt

I'd probably be paying in £850 per month with around £670 going out!

DominicJ_2

But if your overdraft is cancelled, you could use your credit card to pay it back.

AlexInDebt

But if your overdraft is cancelled, you could use your credit card to pay it back.

Now that is a clever answer. Cheers.

Alex

Ben8282

DominicJ wrote: »

But if your overdraft is cancelled, you could use your credit card to pay it back.

No because the OP has already cut his cards (plural) in half and lowered his credit limit.

Do you actually have a £1500 overdraft facility already? That is quite high for someone who has only £850pm going into the account.

If the cards had not already been cut up and the credit limit lowered I would suggest that the OP uses the overdraft to pay the £1150 in full immediately then uses the card for purchases paying in full every month thus both avoiding cc interest and reducing overdraft interest/amount of overdraft used by making purchases on the card and leaving some extra money in the bank account.

AlexInDebt

Reply.

Please let me clarify.

I have cut up my 3 credit cards, I now just have my debit card and savings card.

I have not got a £1500 overdraft, just a £50 overdraft. My bank says I can have a £1000 overdraft. The £1500 I quoted was the maximum amount for that particular APR / AER rate. Then it goes up etc.

I no longer want to make purchases on my CC cards, I cant because they are cut up. I can however use my CC online because I know the long sixteen digit card numbers and expiry dates etc. My problem was spending my CC in shops, rarely do I spend online.

My Capital One card, will not budge on the APR rate hence looking for alternatives. I cannot get anymore CC's because they decline me as I already have 3 CC's maxed out. However my bank will give me an overdraft at a lower rate. Hence, querying if this would be a sensible move, other than paying the high CAP1 intrest rate.

Does this make since to anyone, its confusing I know!

Thank you.

Alex

Ben8282

Yes it makes sense