Student overdraft is going to begin charging interest

grumbler

If reducing the overdraft balance results in lower charges you pay for it, then surely you have to put all your money available into it.

If the bank doesn't cut the limit, you can take the money back in Sep if you can't transfer the balance and the CC debt stars costing you more than overdraft.

MrJester

grumbler wrote: »

If reducing the overdraft balance results in lower charges you pay for it, then surely you have to put all your money available into it.

If the bank doesn't cut the limit, you can take the money back in Sep if you can't transfer the balance and the CC debt stars costing you more than overdraft.

I currently do not pay anything for the overdraft. As of September I will pay £1.50 a day for the privilege.

They wont cut the limit, they're just going to begin charging me a daily fee for having the balance in that amount.

Up until now, my concern has been paying back credit card debts until they begin charging interest. I think the overdraft is the most likely thing to cost me more because of the daily fee as well as the difficulty I may have in either paying it back or finding money or a money transfer to be able to get rid of it.

MrJester

BTW. I have £400 in a HTB savings account. Go on and tell me that I'm being ridiculous having savings, when I have these debts?

grumbler

As I said, this depends on how your overdraft charges are structured.
Generally, yes, you are doing this wrong and I have already said this before:

MrJester wrote: »

...if it's interest, not just a flat fee, you pay more interest on the debit balance if you have a separate account with a credit balance.

MSE: Repay Debts or Save?

If the overdraft and the CC are currently free, it's perfectly fine to have savings elsewhere. It makes sense to make small payments to the overdraft to demonstrate that you are working towards reducing the balance, and keep all money in a savings account earning interest - until the overdraft stops being free.

MrJester

The overdraft is flat fee, without any interest to come.
Credit cards are interest.

Assuming both CC (the most time sensitive one I have) and OD are both 1500 debt.
Credit card with APR (29.9 - need to check though this is from memory) after 0% period will end up being something like 1950 over a year.
Overdraft with daily fee after 0% period will end up being something like 2047.50 over a year.

However, its quite likely I can BT the credit card elsewhere at the time. The overdraft not so much. So my thinking is I should get the £400 savings into my current account and reduce the overdraft a good chunk, and then also build up from there and hopefully have it gone before September. As it will be quite difficult for me to get a money transfer of a large amount I would assume..