Advice on using a Credit Card to clear Overdraft

zerog

GeorgeRob wrote: »

Can someone just clarify something for me please? I'm having a blonde moment..

If I open a 0% credit card, and make a money transfer to my bank account, and then maybe transfer that money from my bank account to my girlfriend's account... None of that process is a balance transfer is it? A balance transfer is when you open up a new card, then immediately transfer the balance of another card onto it, right?

So say I open up a £1500 card with 15 months at 0%, and pay off say £30 a month.. in the 13th or 14th month we would then have to apply for another 0% card to do a balance transfer onto, in order to continue paying off the debt.. right?

What if we were refused all applications for the 2nd card? We would then only have paid off £450 of the debt, and would suddenly have the remaining £1050 accruing huge amounts of interest on the 1st card, as it's 0% period of 15 months had ended?

Is this the main risk when playing the balance transfer game?

Yes, correct. That's why you need to have a plan for how you'll earn enough to pay it off.

If you really get into trouble, then you just have to use the overdraft to pay off the card, but hopefully you'll have at least made some progress and only be £1000 in debt instead of £1500

I suggest posting on the Debt-Free Wannabe board to see how you can spend less, if you are not able to increase your income.

And if you manage to get a credit limit of £5000 or something, do not spend it!

justcat

It will still be a balance transfer (or money transfer) when you do the initial transfer to your own account. Moving it from your bank account to your girlfriend's account won't count as a BT.

Yes, you would have to open another balance transfer card at that point if you want to benefit from 0% BT if you can find another card. You can then BT from the current card to a new one with a BT offer.

Yes, if you were refused another 0% card when the current offer ended, you would have to pay the rest off at their going interest rate. Although it probably wouldn't be "huge amounts of interest".

When most people get a BT card, it is with the intention of paying the balance off in full before the end of the offer. For you, it would be at £100 a month. If you could stretch to that, it would be very useful so you could just get it out of the way.

GeorgeRob

justcat wrote: »

https://apply.mbna.co.uk/UKNeoCCapp/entry?sc=1UCMMBNIMB0031D&mc=UCMMBN003LJ

If you click on start now, it does the eligibility check - It says in the blue box on that page. Have you gone through with the full application?

Thank you! Maybe it was because we chose the "Everyday card" - thinking that at 24months it would be easier to get.

Well we just ran the eligibility check for her on the platinum card from the link you provided and it said:

"Sorry

Based on the details you have provided our eligibility check has confirmed that we cannot currently offer you a credit card.

Should your circumstances change, we may consider an application from you again in the future. We would suggest waiting at least 6 months before applying.

The good news is that this quotation search won't affect your credit rating."

The part that worries me there is that it says "We would suggest waiting at least 6 months before applying" - but I thought this was just an eligibility check, so why the hell would she have to wait 6 months before "applying" again? It makes it sound like she's just done a proper credit check.

GeorgeRob

Now I've just run the same eligibility check for myself and it's offered me the card on a 16 month 0% deal:

0% on balance transfers for 16 months from the date your account is opened (2.9% handling fee). For this great offer your balance needs to be transferred within the first 60 days of your account opening.

0% on money transfers for 16 months from the date your account is opened (4% handling fee). For this great offer your balance needs to be transferred within the first 60 days of your account opening.

0% on card purchases for 3 months from the date your account is opened.

So is this bit in red saying I can transfer the full £1500 from this card, into a bank account?

Does anyone know if they would allow my girlfriend to set up a monthly Direct Debit from her account to this credit card, to pay it off without us having to think about it? (until 15 months is up and we have to do another balance transfer).

GeorgeRob

zerog wrote: »

Yes, correct. That's why you need to have a plan for how you'll earn enough to pay it off.

If you really get into trouble, then you just have to use the overdraft to pay off the card, but hopefully you'll have at least made some progress and only be £1000 in debt instead of £1500

I suggest posting on the Debt-Free Wannabe board to see how you can spend less, if you are not able to increase your income.

And if you manage to get a credit limit of £5000 or something, do not spend it!

Haha, no question of that! I am extremely vigilant and would not allow her to do anything of the sort!

We have done all the cost-cutting measures we can already - I'm a real tightarse and bargain hunter, so I don't think we could save any more money unless we give up drinking, or just eat beans on toast every night - 2 things we're not prepared to do!

justcat

GeorgeRob wrote: »

Now I've just run the same eligibility check for myself and it's offered me the card on a 16 month 0% deal:

0% on balance transfers for 16 months from the date your account is opened (2.9% handling fee). For this great offer your balance needs to be transferred within the first 60 days of your account opening.

0% on money transfers for 16 months from the date your account is opened (4% handling fee). For this great offer your balance needs to be transferred within the first 60 days of your account opening.

0% on card purchases for 3 months from the date your account is opened.

So is this bit in red saying I can transfer the full £1500 from this card, into a bank account?

Does anyone know if they would allow my girlfriend to set up a monthly Direct Debit from her account to this credit card, to pay it off without us having to think about it? (until 15 months is up and we have to do another balance transfer).

Well, it depends on how much they offer you on the card. There is usually a limit of 90-95% money transfer to credit card balance.

I don't see why you couldn't set her up instead as the direct debit payer.

Also, the reason why they probably say that you should wait 6 months is because THEY know you have tried to apply. The check wouldn't show up on your report to other lenders. It's just that now MBNA have your details so they will probably just reject it straight away if you tried applying again.

YorkshireBoy

justcat wrote: »

I don't see why you couldn't set her up instead as the direct debit payer.

I can think of one very good reason why the OP shouldn't do that!


It sounds like the OP is the tightwad and financially careful? If their girlfriend is a little lax, and doesn't have sufficient cleared funds when the DD is called IT IS NOT HER CREDIT FILE THAT WILL BE RUINED by the ensuing late payment marker.


For that reason, if I was helping my girlfriend I'd want to be the one responsible for ensuring payment was made on time.


What say you OP? Still thinking about a DD from her account rather than a SO to your account from hers to cover your own DD?

justcat

I should have been clear - I was answering that it would be possible - I don't think it's a good idea myself.

GeorgeRob

YorkshireBoy wrote: »

I can think of one very good reason why the OP shouldn't do that!


It sounds like the OP is the tightwad and financially careful? If their girlfriend is a little lax, and doesn't have sufficient cleared funds when the DD is called IT IS NOT HER CREDIT FILE THAT WILL BE RUINED by the ensuing late payment marker.


For that reason, if I was helping my girlfriend I'd want to be the one responsible for ensuring payment was made on time.


What say you OP? Still thinking about a DD from her account rather than a SO to your account from hers to cover your own DD?

Haha, I see what you're saying. She's actually not that bad with her money, but she was before she met me! The main reason she's in this pickle is because she was on a 19k office wage, but jacked it in to be on 12k in the career she wants to be in - photography.

As for your question - you're probably right. She gives me the rent and bills money every month when she gets paid (we're very organised!) and never misses a beat, so it would probably make sense if she just gave me £30 more on top of that each month, rather than set up the DD to the credit card in my name.

GeorgeRob

Thanks Justcat for your answers too - I'm blown away by how helpful everyone is!