Pay off overdraft with Credit card

ed15jd

I've just taken a Barclay Platinum Card to transfer my ££800 balance to form my Virgin card, After a major budget review over the weekend we've realised the 2 overdrafts we have equate to £1600:eek:

So I'm considering is it worth writing a cheque from my virgin credit card account to clear and pay the overdraft before I do the balance transfer !HELP

MoneyGirl_2

No, because generally, credit card cheques attract higher interest rates and almost always from the outset, so you pay interest as soon as the cheque is used. It does not count as a balance transfer unless they have some sort of special thing going on, which I've never seen myself.

YorkshireBoy

ed15jd wrote: »

So I'm considering is it worth writing a cheque from my virgin credit card account to clear and pay the overdraft before I do the balance transfer !HELP

Yes...quite possibly.

Assuming you're paying 19% EAR on your overdrafts, this equates to around 1.5% per month.

The Virgin cheques will carry a circa 3% fee, so after two months you're ahead (and starting to save money with the 0% Barclaycard rate). However, the £1,600 worth of Virgin cheques will start to incur interest (check the rate) on your Virgin card from the moment your banks present them for payment.

This interest can be minimised by good timing with the Barclaycard BT, which you should set up for, say, £20 more than the value of the cheques you write. This will ensure you create a small positive balance on the Virgin card in order to stop the interest accruing. You can either then spend this amount, or call Virgin to close the card and they will refund it.

There are other (cheaper) ways to achieve your desired outcome, but this is perhaps the easiest.

Good luck.