Credit Card to Clear Bank Overdraft?

pnq06

Hiya,

Just a quickie....

Would it be sensible to use a credit card to clear off my bank overdraft of £2700.00?

Thanks

CLAPTON

its depends upon the APR of the OD and the APR of the CC and the BT fee assuming you are going to BT and the average actual value of the OD.

pnq06

Thanks for the reply...

Can I just be naive and ask what BT is?

My current overdraft apr is 18.9% (eek!!!) and is costing me approx £30 per month.

Could I get a credit card with 0% apr for 12 months and pay that back?

Thing is I am constantly in my overdraft so is this advisable?

cw635

BT is Balance Transfer. These usually carry a fee at 2.5-3% of the amount you're transferring so you need to take that into account. You'd have to transfer the balance as withdrawing the cash to pay it into your bank account wouldn't be covered by the 0% offer and would be more interest than the purchase APR.
But if you can transfer and then pay it off before the 0% offer ends then that would be best, in my opinion. Hope this helps.

pnq06

Thanks for that cw635. I think I might be a brave girl and go and talk to my bank manager to see what they think. I'm no good working out figures lol!!!

CLAPTON

I would be extremely careful in speaking to your bank manager. Remember they are not your friends and their concern is the security of their money and not your best interest.
Their usual response to money problems is to offer you a very high APR loan over a long period... you dont need this; you can sort this out yourself.

What you need to do is this

Firstly and foremost consider why you are in the OD debt.

Can you increase your income (e.g. parttime job, overtime )

Can you reduce your spending... work out a detailed budget listing everything you will spend in the next 12 months.. that means everything including yearly or one off spends.
The yearly and oneoffs spends you need to divide by 12 and add a line to your monthly budget... and yes you will have to actually save up that sum each month so you have it available when the actual money is needed.
Start a spending diary and write down everything you spend.. absolutely everything..that coffee, that haircut, as well as all the obvious things, so you can find out exactly where all your money is going.

Once you have doen this hopefully you will have freed up some money to speed up the debt repayment. Only after this is it really worth moving the debt around.

If you like once you have sorted out your income and spending post your SOA (thats what its called ) on the debt free wanabee board and see if people can offer useful points to saving money.

pnq06

Thanks CLAPTON..

Unfortunately we're in the overdraft because I no longer work due to being in the late stages of pregnancy and bills etc needing to be paid.

We only got such a large overdraft in the first place because we were both on good earnings... My partner still works full time all the hours that he can but we also have to be careful as he pays csa and any extra money he receives basically gets taken back off him.

The spending diary sounds like a great idea... Although pretty disheartening as there are no luxuries in our spending :rotfl: