Clearing overdraft with credit card, switching to close account before DMP

SpireCaptain

Hi all,

Just wondering if it would be worth clearing an overdraft with a credit card, using the switch service to close the account to another overdrawn account, clearing that with a credit card and switching to another overdrawn current? I have clean bank accounts with banks I don't owe to so day to day money is safe that way.

The reason being is I've read how hard sometimes overdrafts are to default and I currently have 3 (plus a business account overdrawn) but if I can max out my credit cards before defaulting at least it's 2 less current account overdrafts to deal with plus the 6 credit cards I'll be self managing.

Or am I overthinking and as long as no payments go in or out they will default fairly reasonably.

Many thanks

RAS

You need to be clear what you mean by "switch" when dealing with debts and banks.

If you mean that you intend to use money from one source to pay off a debt elsewhere whilst not increasing the debt, that's one thing.

If you intend to use the Switch banking mechanism, that's another.

With regard to ODs, generally it's best to just treat them like any other debt. If they don't default in say 6 months, write and tell them your plans and ask them backdate the default to 3 months. And make a formal complaint if they don't issue the default.

sourcrates

There is some sense in what you are proposing, as credit card accounts will by nature, default sooner than a bank account will, but are you just creating more work for yourself?

I guess its up to you, as in the long run it doesn't really matter.

Debt management is flexible enough to be all things to all people, you can run it how you see fit, and what best fits in with your own plan.

Banks can be notoriously slow to default a non serviced overdraft.

ManyWays

This sort of switching around around also adds some costs for the 0% transfers. And will take some months. I think you are overthinking an uncertain process

I think it is easier to just get going. You can tell the banks you will not be making any more payments until the overdraft is defaulted. Or just get going with Stepchange, with a very comfortable budget and then later tackle the few debts (which may turn out to be be none!) that haven't defaulted after 6 months.

Money_and_Travel

I would have thought a bank loan would be a better option.

sourcrates

https://forums.moneysavingexpert.com/discussion/comment/82112327#Comment_82112327

You miss the point of the post, its about which debt is quicker to default, a credit card balance or a bank account, its not about the best method to use.

born_again

Given that banks tend to not let you pay a O/D with a CC. Then OP is going to have to hope they can get a money transfer offer on one of their CC's. Which may not be a easy task given their situation.

ArtyJ931

The bank I had my OD with (which was 0 when I started my DMP) I also had a loan with so they’ve continued to take monthly payments for the loan until the OD was maxed out so I’d be wary of clearing an OD.

SpireCaptain

Thanks all for your thoughts. It's more a case of neatness/ 2 less accounts to manage going forward if I get them closed by switching twice full cut le back to Bar lays account 1. It's only gone overdrawn as it was used for credit card minimum payments, So the debt is just circulating really.

I just wanted to use the switch service to close it down as the last savings account I closed with Barclays took 3 hours on 3 different chatbot/human chats to get it closed down frustratingly over a week long debacle.

I can switch to Halifax/Lloyds if it's overdrawn or I'll just clear it with money from a credit card and switch it then. It also means the CCs can try to reissue the DD mandates but they'll struggle. Especially when the Batclays is closed, then I switch the Halifax/Lloyds to the final Barclays current account that has no money in or direct debits coming out of.

I'll then be left with 6/7 credit cards to default, 1 current account overdraft (and a business overdraft and BBL that I may keep in good standing as it's £108 per month from 4 more years) the only problem is the business account is costing £50 per month in frees and interest.

SpireCaptain

That's frustrating as it kept 2 accounts from defaulting until the OD was maxed?

SpireCaptain

The CC I was going to use still has a low rate for lifetime of the card for money/balance transfers. I'll be sad to see it go as it's been a useful card especially during the balance transfer juggling years.