credit card or overdraft?

sc0ttie

I am due to move home, i am renting and will need to pay £850 to the estate agent before i can move in this weekend. I dont have that cash, I do have a HSBC master card and I also have a £1300 overdraft limit agreed on my current account with HSBC which is is in credit right now.
I am going to have to use one of these borrowing methods to pay the estate agent, but can anybody advise me on whether or not it will be better for me to use one and not the other borrowing method?
Thanks

YorkshireBoy

What's your primary concern?...cost, risk, or effect on credit rating (both internal with HSBC and external with the CRAs)?

sc0ttie

The end cost I suppose, like if one will take much longer than the other to pay off. I had dipped into my overdraft a couple of months ago, by about £80 a week before payday and I got an interest charge of about 30 pence on my statement. But here, we would be talking about 3 months for me to have paid that money back in full so the interest would be much more. I just dont have an idea on which would be the least expensive to pay back.

bigadaj

You'd need to quote the rates and fees on both to be sure.

If the ea will accept a credit card then pay in this assuming you clear your card every month and don't currently have debt on it. This will give you four to six weeks interst free, and then pay this off from your bank account to use the overdraft after this time, and obviously aim to clear as soon as you can.

Cycrow

Also be aware that they may charge for using the credit card, so u'll need to check and factor that in.

sc0ttie

Sorry, yes I currently have £500 debt on my credit card, which i have been making regular payments to each month (it was £1000) above the suggested repayment rates and will continue paying that whether I use the overdraft or not. My credit card is 18.9% the overdraft interest rate is quoted as 19.9% EAR variable.

YorkshireBoy

So your credit card is cheaper. But...if your income reduces the overdraft balance for part of the month you will pay less interest with the overdraft. But...overdrafts can be recalled at any time. Decisions...

sc0ttie

I have had an overdraft facility for over 15 years and never had it recalled before. is that a common occurrence? And what happens if it is recalled and the customer does not have funds to cover it?

YorkshireBoy

Withdrawal of facilities is not 'uncommon' (going by posts on here).

And if you can't repay you go on a payment plan and your credit rating is damaged.

yasmup

sc0ttie wrote: »

I am due to move home, i am renting and will need to pay £850 to the estate agent before i can move in this weekend. I dont have that cash, I do have a HSBC master card and I also have a £1300 overdraft limit agreed on my current account with HSBC which is is in credit right now.
I am going to have to use one of these borrowing methods to pay the estate agent, but can anybody advise me on whether or not it will be better for me to use one and not the other borrowing method?
Thanks

sc0ttie wrote: »

Sorry, yes I currently have £500 debt on my credit card, which i have been making regular payments to each month (it was £1000) above the suggested repayment rates and will continue paying that whether I use the overdraft or not. My credit card is 18.9% the overdraft interest rate is quoted as 19.9% EAR variable.

How do you plan to pay off the money you are borrowing?
You do realise any new home will probably incur you in additional expense, don't you?
If you really need to borrow money for the deposit, ask yourself if you can really afford this tenancy.

Or are you moving from one rental property to another and hoping to get the deposit from the previous rental back to fund this one?

If so, you do realise the difference in interest on £850 is only about 70p a month? And don't forget you won't need to borrow £850 as you already have cash sitting in a current account doing nothing whilst paying 18.9% on existing borrowings on a credit card (over £7.50 a month in interest! :eek:)
When is your next payday as that will also presumably pay back any borrowings if you use the overdraft facility?

yasmup

YorkshireBoy wrote: »

Withdrawal of facilities is not 'uncommon' (going by posts on here).

I've never had an O/D withdrawn either on any of my current accounts.

HSBC were going to reduce it a couple of years back during the height of the credit crunch (although they said it was for my security as I never use it anyway) but a quick call and they agreed to leave it as it was

YorkshireBoy wrote: »

And if you can't repay you go on a payment plan and your credit rating is damaged.

Wow, nothing like being alarmist is there? :eek:
Why not go the whole hog and suggest they will get a summons and send the bailiffs round?
Or how about for £850, they could start declaring the OP bankrupt??? :cool:

Chances are the bank will simply offer a loan instead, (that is if they do withdraw the overdraft facility, which is unlikley imho) especially to a customer of 15 years standing who's account is currently in credit (and no mention of past defaults)

Or you'd go and get a loan elsewhere if the bank do refuse
Or even get a cash advance from the credit card if necessary (very unlikley it would ever get to this stage)
If the Letting Agent is prepared to take a credit card for the deposit, then chances are they will allow the rent to be paid that way too (avoiding any reason for expensive cash advance)
Withdrawal of overdraft facilities usually in on 28 days notice (assuming not in default etc), so plenty of time to make alternative arrangements in the unlikley event it does happen.