Using credit card 'cash' to help?

HobbesUK

My credit rating has been pretty poor due to missed payments a few years ago, and in the past I have tried to apply for a new card in order to attempt a 0% balance transfer but have been declined. In the past year or so, my payments have all been on time and I am very, very, slowly working through the credit card debt.

I am also using my overdraft and into my 'reserve' with my bank (Barclays) for most of each month, apart from perhaps a few days following when I get paid. I am charged £22 every 5 days for being in this 'reserve'. As a result, I find myself being charged anywhere between about £90 and £120 a month. I asked Barclays if they could help at all (i.e. increasing my overdraft so that I don't use the reserve), but was told they wouldn't be able to do that.

However, this week I received a letter from my credit card company telling me that they are increasing my credit limit by about £2000. My question is this:

Would it be worth me taking some (~£600) of this additional credit as a cash withdrawal, and put it into my bank account to cover the reserve and overdraft, therefore avoiding the £22 charges? Obviously I would therefore be increasing my debt, but would that be somewhat cancelled out by being about £100 better off each month, which could then go towards paying the debt off anyway?

Additionally, I'm hoping that my increase in credit equates to me having a better credit rating, therefore there's a better chance of getting a 0% balance transfer and so helping reduce the debt quicker too.

Thanks in advance

Jox

Probably not a great idea to do this.

Can you save money in any other areas to reduce your outgoings?

Can you get a part time job or sell on ebay to try to make some money?

If you post a SOA other helpful people will come along to offer advice.

grumbler

HobbesUK wrote: »

....Would it be worth me taking some (~£600) of this additional credit as a cash withdrawal, and put it into my bank account to cover the reserve and overdraft, therefore avoiding the £22 charges? Obviously I would therefore be increasing my debt, but would that be somewhat cancelled out by being about £100 better off each month, which could then go towards paying the debt off anyway?

This depends on the interest rates you pay, but most likely it will be better in the long run. However, what's the point in paying 3% cash advance fee and a higher interest on cash advances if you can simply use the credit card for spening instead your debit card and thus gradually get your current account in black?

That said, you must learn the lesson and stop using the overdraft at all, otherwise it will not take long for you to find yourself in in the same position as now, but with higher credit card debt.

HobbesUK

grumbler wrote: »

However, what's the point in paying 3% cash advance fee and a higher interest on cash advances if you can simply use the credit card for spending instead your debit card and thus gradually get your current account in black?

There is very little spending on the debit card. It's mainly rent and utilities paid by direct debit.

grumbler wrote: »

stop using the overdraft at all

About two/three years ago I had to go into the overdraft and reserve. Looking back, there were probably better options for getting the money I needed at the time, but unfortunately that was the option I took. Thus, since then I have been kinda 'stuck' in the negative most of the time.

grumbler

HobbesUK wrote: »

There is very little spending on the debit card. It's mainly rent and utilities paid by direct debit.

Well, how do you pay for everything else?

StuC75

Think a SOA is in needed here, curb back on the spending thats taking into the buffer..

If the fees are so high then take a good look at what the spending is.

The worry woth more available credit is that you would just spend to that, so be carefull that the banks not giving you more 'rope' here..

Would a balance transfer be possible, rather than cash advance so the rates not so high? maybe with your spending better mapped out and such fees avoided you could handle such a transaction over a couple of months - with the od & buffer cancelled..

Use this as the lightbulb moment,, is a cliche used elsewhere..