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Overdraft to credit card - Good idea?

2

Comments

  • pogg000
    pogg000 Posts: 588 Forumite
    Part of the Furniture 500 Posts
    steveo1982 wrote: »
    By my own admittance I spend money on things that I shouldnt do and I find it difficult keeping control of my money. If I have all charges in one place it makes it easier for me to keep a tighter grip on this.

    I would sort this out first!!!!

    Before you can plan the best way forward to pay your debts you need to be living within your means.
    lbm 11/06/12 dept total 11499.47
  • ItsOver
    ItsOver Posts: 25 Forumite
    I am mid-switch from RBS to First Direct, and so far so good. It sounds like you have the Royalties Gold account if you are paying £12.95 a month, I was sold the same thing.

    One thing I'd suggest before you switch is dealing with the overdraft. You only get £500 from First Direct as default and your overdraft doesn't automatically transfer. You close the RBS account and owe them the debit, which can be tricky to pay because the account is closed.

    From what I gather you can either:

    1) Ring First Direct on the switch date after 11am and tell them to pay the debit
    2) Go into an RBS branch and pay them

    In any case, it's less hassle to switch while in credit.
    LBM: Jan 2013
    Debt Was £5,500 / Now £2,934

    DFBX2014 #061 (£666 / £3600)
  • Yea sounds like the royalties gold account. I dont use any of the benefits that it gives me and cannot remember what they are in the first place.

    I think the debt on the credit card could be the way to go. Cancel the overdraft on my RBS account and then use whatever is left after all bills go out from the RBS account to pay off the CC debt.
  • MallyGirl
    MallyGirl Posts: 7,326 Senior Ambassador
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    ... making sure that it will all be gone before your 0% period runs out, or you will be left paying even more than before.
    I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
    & Credit Cards boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.
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  • MallyGirl wrote: »
    ... making sure that it will all be gone before your 0% period runs out, or you will be left paying even more than before.

    Good point :-) I will focus on the debt and have it paid off before the interest free period runs out.
  • Mulder00
    Mulder00 Posts: 508 Forumite
    Ninth Anniversary 100 Posts
    I think you are too focused on moving the debt and not enough on repaying it. I see no point in moving it into a credit card and then putting all your left-over money in there (4% charge to move it = £40 or £10 a month to leave it where it is - based on what you are saying, it will be paid off in 3 or 4 months and the interest will get less as you repay it, so it's cheaper to leave it where it is). Whether in a credit card or in an overdraft, debt isn't easier or more difficult to repay and if you focus yourself, it will be cheaper just leaving it where it is.
  • My main focus is to repay the entire debt but for it all to be in one location. It may just be the way I am looking at it but feel that the overdraft is not going down if im paying the CC off.

    Do you know if there is a limit to how many times I am allowed to change my overdraft limit on my current account ?
  • Tixy
    Tixy Posts: 31,455 Forumite
    If you can pay up to £400 a month towards the debt then for the next 3months if you pay say £50 towards the credit card you can reduce your overdraft by £350 a month (that is ensure the maximum point before payday is £350 less than the previous month).

    That option would cost you slightly less overall than doing a balance transfer.

    You should be able to change your ovedraft limit at least once a month if you wanted the extra incentive not to overspend each month. Some banks will run a credit application search each time you reduce your overdraft limit, not sure about RBS.
    A smile enriches those who receive without making poorer those who give
    or "It costs nowt to be nice"
  • Thats what I was worried about Tixy, dont really want to be credit checked each time I drop my limit.
  • steveo1982 wrote: »
    My monthly income is £1900 and outgoings are £1450 but this doesnt include bank charges and interest on the account from the overdraft. The idea I had was to have no overdraft on my current account, have the overdraft transferred to credit card so the interest free debt on that would be £1500 including any transfer fees. I would then use anything left in the current account after all bills ect taken to pay the balance on the CC and then any small spendings put on the CC so the current account would not be touched except for anything other than bills. The average amount I would be paying to the CC each month could be upto £400 with a minimum spend so £300 would be going towards the initial debt.

    I agree with people saying you first need to look at your spending habits as from the info you give here it looks like you have £450 a month spare, I don't think the bank charges and interest will eat up too much of this. So looking at it you could be out of your overdraft in just over 2 months with out the transfer. This obviously isn't happening as you said you have been in overdraft for 12 years and this is going to be a BIG thing to break. You are going to have to really look at what you are spending and cut down what your spending.

    Now I have been using a piece of software called YNAB (You Need a Budget) since July and from starting with £1500 quid I am now upto £7000 odd and I actually look forward to my income coming in so that I can budget it out using this software. They do a 34 day trial and the support is all free and the forums are fantastic as there are loads of people on there happy to help you get started. Its worth a look as it will show you clearly where your money is disappearing to and what you need to change. Good Luck!!
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