The best of a bad situation?

toasterman

Hi,
I've been unemployed for a while, but recently got a full time job. Good news.
However, because I don't get a full month salary until the end of May, when my rent and other payments go from my bank account (before pay day), I will end up in an unplanned overdraft situation, and will have to pay lots of charges.

I get paid on the 1st June, but by my estimations, I will hit unplanned overdraft territory around the 24th May.
I've applied to have my current overdraft increased, and it's been declined.
I've still got several credit cards though, so I'm considering withdrawing cash from one, and paying it back into my bank account again.

So my question:
Am I right in thinking that when I pay money to the credit card company, they (I think legally, have to) clear the highest-interest sections, first?
That is, if I withdraw £200 in cash, and a week later, pay them £300 back, I will have cleared the high-interest portion, and be back to just owing them money for my purchases/balance transfers, at the lower interest rate of those?

Is that right?
It's been a while since I've been in a position to have to do this.
Thanks in advance for any help/tips.

Miss_Spendalot_2

what date in May will your direct debits start coming out? is it to the end of the Month or earlier?

EDIT: Ahh sorry you did say the 24th, Have you tried ringing up the companies and asking if you can make a one time later payment as your wages are going to be late into your account? I did this with a couple of companies once before and told them what date I would have available funds and they were okay about it.
They do not like you doing it often but a one off might be agreeable. Same goes for your Rent/Landlord, It's worth a go anyway..

PS: I am not sure about your original question though about the cash withdrawals though but Good luck.

Eydon

With regards to which balance gets paid back first, the payment is supposed to go towards the highest interest rate first, but some cards only do this to balances that appear on your statement, so in your example the payment may not be allocated to the cash advance because it might not yet have appeared on your monthly statement.

bbfc

I would also consider the possibility of the bank refusing an informal overdraft request, which would cost you for every one they decline. How much depends on the bank.

Stuart_W

If you do it right, you might be one of the small number of people that can use a PayDayLoan company (as long as you maximise cashback links) to cover this short period.

For example, if you use the £45 cashback link on Quidco, you could get a £200 loan from PayDay Bank UK and repay £250 within 28 days. Total cost to you is a fiver. A credit card cash withdrawal is likely to have a 2%-3% fee in addition to the interest rate. It might take a couple of months to get the actual cashback, so don't reply on it to repay the loan. Repay the loan in full on payday to avoid being stuck with the most expensive type of debt on the planet.

If you've only just gone from being unemployed to employed and your own bank has turned down an overdraft, this might be the only type of option other than using credit cards as suggested.

If you think you might be tempted to not pay back the payday loan, or extend it, please ignore this suggestion at all costs.

toasterman

Thanks for all your tips re this.

I survived, due to a bit of juggling, and a one-off payment for Jobseeker's Allowance (that I put in for ages ago), finally being accepted, and them paying me a bulk payment of the missing weeks between claiming, and job start date.

Sadly, a fortnight from the end of the month, my car failed its MOT (badly), so I've ended up withdrawing cash from a credit card, to buy a replacement one. (Cheap, old. No hire purchase agreements here.) On the upside, it's smaller, cheaper to insure, cheaper to tax, statistically more reliable, and should have much better MPG than my old one. And I should earn around £120 for my old one, due to the scrap value.
Also, as a pure fluke, I discovered today that the bulbs in headlight, taillight and brake light are the same between old and new car. So I can use all my existing spares (and take them from the one I'm scrapping), for my new car.
Also there was a reasonably nice-looking stereo in my old car when I bought it (with wired and wireless remotes), which I'm going to eBay, as it was never to my taste - too bassy on every setting, and it didn't have an iPod connector.

I'm feeling a lot more secure about it all now though, job seems to be going OK, and I should be able to work my way out of debt within a reasonable time. Thanks again for your tips/info.

beadgirl87

Well done, glad you managed to figure it out. Sorry to hear about your old car. Good luck with settling into the new job.