urgent help required in reducing overdraft

Mr.Bean_2

Thanks everyone for your helpful comments, I've been at work so haven't been able to respond until now.

Scritti wrote: »

I know you don't want to "borrow any further" but is there any way you would be accepted for a 0% interest balance transfer credit card?

I was paying £170 per month in credit card interest (!) and transferred the lot over to a 0% card. The £170 now goes fully onto paying off the debt instead of going into the bank's coffers and I overpay on top of that by about £70 a month to help pay it all (or most of it) by the time the 0% period ends.

It was well worth paying the 2.7% fee in order to do this. Did it about a year ago and my CC balance is finally dropping quickly. It's a real boost to me to see the balance dropping so rapidly each month for the first time in many years.

A friend at work was in the same position as you so I gave her the same advice. She used her (then) current credit card for 2 months for all purchases (took 2 months because her rent & DD's still came out of the account) and left her wages in her account to clear the overdraft then transferred what was on her credit card to her new 0% interest card.

She said she is saving loads but also feels a lot better now her account is always in credit as it always used to feel like she was working for free as her account was always in overdraft, even the day she got paid.

There are also some cards which are 0% and will pay off your overdraft so that is another option.

So long as you will be accepted and won't use the new card for purchases (not difficult at 27% interest for purchases - no thanks!), it's one of your options perhaps.

Hope that helps - best of luck!!

i applied for the virgin balance transfer one about 2 months back but got rejected for this.

I think the others are all limited to £1200/1400 so it wouldn't cover the cost of the overdraft. If I'm understanding the concept correctly?

I understand it as I ahve a £3600 OD, I would need a 3600 balance transfer to pay that off in one gothen pay off the balance transfer card instead of paying off the overdraft as that would have been taken care of with the balance transfer.

I may have misunderstood the whole balance transfer options however, which if I have, I would appreciate you correcting me

what are the other 0% cards you mention? I only thought that my option was a balance transfer card?


Thankyou all so much for your help

Mr.Bean_2

called the bank and they are unable to do anything regarding the fees unfortunately.

They said if I paid off £250/month then it could be cleared in a year , they also did an income and expenditure form with me and worked out that i would have 250 left over most months. looks like i'll just have to take the plunge and go for it

GlamGirlie

There are a lot of people on these forums who would denounce taking a personal loan to clear a credit card as 'work of the devil' etc etc, and I will no doubt be shouted down for my opinion.

However, I have seen many instances where it has been a worthwhile and successful action.

Provided you cut the card up, close the account and don't apply for any others, it is an excellent way to repay credit card debt. Personal loans are generally considerably cheaper than credit card debt which is on a normal rate of interest.

You can of course get 0% deals, but unless you can guarantee you can clear the debt in the interest-free period you risk having the debt revert to the higher rate at the end, and with no guarantee you can get another 0% in the future.

If you approach the credit card provider (Halifax card, therefore Halifax loan etc) and ask to switch it to a personal loan, the chances are that provided you have some income with which you can afford to commmit to the repayments, they will agree to the loan. After all, their exposure to you is no greater than on the credit card debt. It is in fact better, as they will see the debt reduce over time.

Depending on your own personal credit cicrumstances, they may insist you close the card, or they may not. Either way, if you want to get the debt repaid the best way is to close the card, so it really doesn't matter if they insist or not.

Like I say, there will probably be a hundred replies now, saying it's a terrible option etc, but I thought it was worth mentioning for you.

Good luck.

Scritti

Mr.Bean wrote: »

i applied for the virgin balance transfer one about 2 months back but got rejected for this.

I think the others are all limited to £1200/1400 so it wouldn't cover the cost of the overdraft. If I'm understanding the concept correctly?

I understand it as I ahve a £3600 OD, I would need a 3600 balance transfer to pay that off in one gothen pay off the balance transfer card instead of paying off the overdraft as that would have been taken care of with the balance transfer.

I may have misunderstood the whole balance transfer options however, which if I have, I would appreciate you correcting me

what are the other 0% cards you mention? I only thought that my option was a balance transfer card?

I can't remember which card did balance transfers for O/D's. Didn't even know anyone did it but it was mentioned in Martin's last email (subscribe if you haven't already!). You should be able to find out by looking under the credit cards section of the site (I'm pretty sure it was a Virgin one mentioned though). If you've already been declined by Virgin, that isn't a good sign though.

Glamgirlie mentioned a loan. I'd agree that this is normally not the thing to do. However, if you can't get approved for a 0% CC, perhaps a loan would be best IF you can get a low interest rate one (and be accepted, obviously).

I took out a loan for £10,000 over 22 months at about 7% a few years back to finally pay off a credit card and my overdraft. Was not the greatest idea (didn't know about this site then) but I did just amount manage to get it paid off but did use the CC again to keep me going as the £480 a month payments were very tough. I just wanted to blitz my debt and having the option of just paying off the CC and the overdraft each month but then just using them again was getting me nowhere so I decided to just live rough for 2 years.

In hindsight, it would have been better to loan over 3 or 4 years and not use the CC to prop me up each month as I managed to whack the card back up to 4 grand.

Still, that CC debt has now been transferred onto a 0% card and, apart from that, I now have no unsecured debt.

I still say a loan is not the best idea so, if you can't get accepted by a CC company to shift your debt onto a 0% interest card, I hope someone else can volunteer some suggestions.

nomorefalling

Correct me if I'm wrong, but do you have to pay £3 a day on your overdraft regardless of the amount you are into your overdraft (ie. if you have a balance of £1,000 overdrawn, you'll still be paying £3 a day?).

I'm not going to try and calculate the interest rate on that, but £93 a month is £1,116 of interest for the year! Even if your balance stayed constantly at £3,600 for the entire year, you're effectively paying an interest rate of 30%; most standard credit cards are cheaper than this.

Instead of doing a balance transfer from the credit card onto your overdraft, which I believe can only be done through Virgin and MBNA (again, feel free to correct me if I'm wrong!), could you look to get a 0% credit card for purchases? You could put your general monthly expenses, such as food, petrol, etc that you would normally pay by cash on your card and the cash that would have been used could be paid against your overdraft. It seems to me that you would need nerves of steel to make sure you don't go mad and you still spend the same amount on your credit card as you would do (budget, budget, budget!) but once your overdraft is paid off, the cash can be used to pay off the credit card. I believe the term is stoozing? But you would need to cut up the card to your Halifax overdraft to make sure you don't spend on that as well!

If you're looking to not pay any interest or fees, I think you're going to be sadly disappointed, but this would hopefully make things cheaper.

Hope that helps