switching my overdraft to a credit card?

smithers1981

i am always in my overdraft by the end of the month, overdraft limit is £1500 and by payday i'm probably £600/£800 into it, total interest charges last year was £65.

I have a fresh credit card now after a recent balance transfer, so my thinking is to use this card for everyday spending, but pay it off in full, this will give my debit card a break and hopefully by the time credit card payment is due i will have the funds available without having to go overdrawn.

The card is a Halifax not sure which but has a big enough limit, any flaws with my plan, it seems a good way to 'clear' my overdraft.

YorkshireBoy

The hard facts are that you're living beyond your means.

You need to spend less and/or earn more. Transferring the debt to 0% will give you some time to do this, but your plan will only save you (£65 / 12 £5.41 being as you'll only get the first month 'for free'.

fracturedsun

So long as you can pay it off in full each month this can give you a month in hand. However be careful not to spend more than you can repay in a month it's very easy for it to spiral and before you know it you have an overdraft and a credit card to pay off. It's important to reduce spending alongside anything else you use to pay off debts otherwise it just grows.

shortcrust

The OP isn't living beyond their means. They're not getting further into debt every month and don't seem to be spending any more than they earn. They are in debt at the end of each month, but the two things are not the same.

Lots of people put a large proportion of their monthy expenditure on a credit card and pay it off in full. If the OP does this they will clear their overdraft and will no longer be paying interest. I can't see any flaws in the plan and I don't think they need to spend less/earn more.

YorkshireBoy

chrisjdavies wrote: »

I can't see any flaws in the plan and I don't think they need to spend less/earn more.

So where's the £800 going to come from to settle the debt?...if they don't either earn more or spend less than they are doing now. Remember...OP says the debt is 'static', at £600-800 each month.

And do you not agree that the OP will only get a benefit of one month in interest saving. If not why not? Please explain your reasoning.

shortcrust

YorkshireBoy wrote: »

So where's the £800 going to come from to settle the debt?...if they don't either earn more or spend less than they are doing now. Remember...OP says the debt is 'static', at £600-800 each month.

And do you not agree that the OP will only get a benefit of one month in interest saving. If not why not? Please explain your reasoning.

The OP is £800 into their overdraft by the end of the month. This debt is cleared on payday. If after clearing the overdraft on payday they then spend £800 on their credit card instead of using their overdraft again they will be able to pay off the £800 credit card debt in full with their wages the following month. No extra income needed, no reduction in speeding needed and no interest payments.

smithers1981

Thank you all my overdraft isn't a priority debt and i a using it out of habit i guess, but if i can 'clear' it without throwing extra money at it and reduce charges by a simple change in the card i choose to use then surely this makes sense.

Would think the month in hand a credit card can offer would benefit many other people living in overdrafts.

Currently any extra i earn goes on paying off other higher priority debts.