Credit Card->Overdraft->Money Transfer?

SmileyMatt

Hi Forum,

Long term fan, very rare poster.

Over the last few years I've had kids, got a new job and made a bit of a stretch on the new mortgage deal (to shorten the term). I have a budget and we're generally doing well (staying level or better), but for a number of reason we have an overdraft that reaches ~£5k before payday.

I have a cashback credit card I pay in full each month too. I used to use lovemoney.com that let me view my spending across all my accounts and cards - but since they've started charging my visibility on finances has gone down and my wife and I decided we want to live directly off the bank balance and debit cards to try and ensure we're properly aware of our spending etc.

I can simply cancel the credit card and live off the overdraft but then I'd need to extend my overdraft to allow for the loss of a months credit right? I think that's possible.
So then reading on the site, I looked at the Money Transfer guide and wondered if I could use that to transfer my total debt to a 0% credit card. Getting all my debt in one place at 0%.

It seems like a good idea, but some scary juggling and numbers so I wanted to post to get feedback if this sounds sensible or sanity check if I'm being silly.

Thoughts welcome,
(and happy 2017,2016 and 2015 since my last post..)

YorkshireBoy

You'll need to address the reasons for living in a £5K overdraft (and up to the hilt) each and every month before even thinking about trying to transfer it to a 0% MT card. Have you done so? And if so, by how much has the max usage reduced in each of the last 6 months?

Ebe_Scrooge

In a nutshell - yes, you're being silly. You're basically living on a 5K overdraft ? That is one heck of an overdraft.

OK, shifting the debt to a 0% card might help somewhat - IF you could get accepted for such a card, which I suspect would be questionable.

Forget paying for services that offer to do budgeting for you - it's not difficult to set up a spreadsheet that tracks your income and expenditure. Or even a sheet of A5 paper pinned to the kitchen wall !

Bottom line - you need to do an SOA and see your income versus your expenses. And make some savings. You aren't "generally doing well" if you're living off a £5K overdraft each month. You need to make some savings. Not impossible to do if you post an SOA on the DFW board here, and let the friendly folk there help you.

I hope this reply doesn't come across a being confrontational - it's intended as helpful advice !

SmileyMatt

Thanks for the responses.

I do have quite a detailed budget. I assume SOA is statement of accounts which is similar? As mine currently stands we should be approx £200 a month in the black. That's good a place to be but still makes a 5k repayment a challenge.

However we want to get better visibility of the finances and more rigour in how we follow it which is why we're trying to get off the credit card and have all transactions and balances in one place. There's quite a few things that make clarity on finances tricky, such as the fact I get paid 4-weekly but payout monthly, since my kids started going to preschool we also have to pay school fees based on term time and vague payment terms rather than monthly DDs and some of this also comes from childcare vouchers etc.

Based on the factors involved we're going to take the middle option and just transfer the credit card debt to a 0% balance transfer card, and then stop using the old one. That way I get the consistency on my bank balance, but not the scarier step of the money transfer, which we can always revisit in maybe 6 months and for example I can better answer YorkshireBoy's question

[Deleted User]

T
Based on the factors involved we're going to take the middle option and just transfer the credit card debt to a 0% balance transfer card, and then stop using the old one.

Do you already have such a card, or are you just assuming you can get one?

SnowTiger

Money Dashboard is free and may offer similar features to lovemoney.com, however it involves handing over your account login details to a third party.

IMO it would be extremely useful if banks allowed customers to set up read-only access to their accounts.

Ebe_Scrooge

I do have quite a detailed budget. I assume SOA is statement of accounts which is similar? SOA is Statement Of Affairs - a detailed breakdown of your income and expenditure. It's the first step towards seeing where your money is going, compared to your income. Fill one out, post it on the Debt Free Wannabe board, and the good folk there will help you. http://www.stoozing.com/calculator/soa.php. As mine currently stands we should be approx £200 a month in the black. That's good a place to be but still makes a 5k repayment a challenge.

... we also have to pay school fees ... errm, school is free in this country. If you're struggling to pay for school meals, uniform, etc., then there are ways around this. But school fees are a choice, not a requirement.

Based on the factors involved we're going to take the middle option and just transfer the credit card debt to a 0% balance transfer card,

Transferring a balance to a 0% card is nearly always a good idea - assuming the BT fee is not too high, and assuming you get accepted. Based upon the information provided in your initial post, however, I wouldn't bank on being accepted.

I hope the above comments help. Just my thoughts.

Dobbibill

Thanks for the responses.

I do have quite a detailed budget. I assume SOA is statement of accounts which is similar? As mine currently stands we should be approx £200 a month in the black.

If you have already done a SOA and it is accurate do you have the £200 going towards the OD debt?

If not, then you need to ask yourself why not?

Sometimes it can take a couple of tweaks to get the SOA spot on.....many people start with a wish list rather than an accurate SOA

If you have got the £200 left then by June you will only owe £4k on the OD.