Balance transfer? 0% confused

MrPrinny

I am in a fairly large (for me) amount of debt mainly due to hours at work being cut and rent still needing to be paid.

I owe £1650 on my overdraft and around £500 in various payday loans. Because I am not earning enough to pay the pay day loans off in full, I can only pay the interest which has the knockon effect of the next month not being able to pay them off.

I recently applied to my bank for a credit card with a 20 month 0% balance transfer. However it has a fee of 3.1% (minimum £5)
Now obviously being so overdrawn am I going to get it?

Assuming I do, I am a little confused. The limit would be £1800 on the credit card, so if I transfered the full overdraft over what fee would this occur and would I have to pay interest on this balance transfer?

If this was possible I could then use my old overdraft to pay off the ridiculous payday loans and then with the money I have left over start to pay the transfered overdraft now on the credit card comfortably within 20 months.

This will still leave me with the new overdraft from the payday loans but with a charge of 50p a day, I am not too pressured to pay this off.

Any help you can give will be thanked

YorkshireBoy

Sounds like you bank with Nationwide? If so, your plan falls at the first hurdle because you can't transfer an overdraft (ie get cash at 0% into your current account) with the Nationwide credit card.

MrPrinny

YorkshireBoy wrote: »

Sounds like you bank with Nationwide? If so, your plan falls at the first hurdle because you can't transfer an overdraft (ie get cash at 0% into your current account) with the Nationwide credit card.

Well that's a kick in the teeth.
However, if I could get a credit card with a 0% balance transfer would this be possible?

ic

Balance transfers are nearly always a transfer of a balance from another credit card, not a bank account. You'd be better off getting a 0% purchase card, building it's balance through normal spending and getting your loans paid off. Once you have a balance, then you can transfer down the line to maintain the 0%. However takes a lot of discipline to not let that run away.

MrPrinny

ic wrote: »

Balance transfers are nearly always a transfer of a balance from another credit card, not a bank account. You'd be better off getting a 0% purchase card, building it's balance through normal spending and getting your loans paid off. Once you have a balance, then you can transfer down the line to maintain the 0%. However takes a lot of discipline to not let that run away.

Hi, I believe that the credit card mentioned has 0% on purchases for 6 months. Am I correct in thinking I could use that credit card to pay off the payday loans in one swoop or could I not use it for that?

Apologies, never used a credit card before

[Deleted User]

No. The only way you can pay off the PDLs and overdraft directly is with a money transfer option - eg MBNA. A normal BT oor purchases offer won't do it.

Unfortunately, with PDLs on your file, your chances of getting a 0% deal on anything are minimal.

MrPrinny

Deleted_User wrote: »

No. The only way you can pay off the PDLs and overdraft directly is with a money transfer option - eg MBNA. A normal BT oor purchases offer won't do it.

Sorry, a little confused at some of the terminology you used.

Could you clarify what MBNA is?

[Deleted User]

MBNA are a credit card provider. Their cards often allow you transfer money into your current account, so that you can then pay whoever you want.

Without this option, you won't be able to pay off the ODLs or overdraft, as they can't be balance transferred, and also won't be treated as puchases.

CLAPTON

the majority of CC that offer 0% deal give
a. 0% balance transfer deals which means a transfer from one CC to their CC
b. 0% on purchases

neither of these will allow PDL to be paid off directly

the MBNA stable of CCs (i.e. Virgin etc) do have a facility to balance transfer to your ordinary bank a/c from which you can then pay off your PDL.

With an ordinary 6 month 0% on purchases you can off course use your CC for your normal purchases and then use your spare cash in your current a/c to pay off the PDL; you must be very disciplined to do this however.

MrPrinny

Deleted_User wrote: »

MBNA are a credit card provider. Their cards often allow you transfer money into your current account, so that you can then pay whoever you want.

Without this option, you won't be able to pay off the ODLs or overdraft, as they can't be balance transferred, and also won't be treated as puchases.

Thanks.
I guess I will have to keep muddling through and see what I can do

MrPrinny

CLAPTON wrote: »

With an ordinary 6 month 0% on purchases you can off course use your CC for your normal purchases and then use your spare cash in your current a/c to pay off the PDL; you must be very disciplined to do this however.

A very good tip! Although I am living on around £30 a month for food and water, £30 every month would reduce the interest on the loan by a small amount everytime, thus freeing up more money to pay them back.

I have to be disciplined, I want to be debt free.