Paying off loan and overdraft with credit card?

liegerm

Hi all,

I want to pay off my loan and my overdraft and have thought about using a 0% credit card to do this by using any old credit card for the initial settlements and then shifting the debt to a card with 0% interest on balance transfers.

Does this sound feasible? Is there a better way of doing it? Will I get charged a premium by the first card for a cash withdrawal?

Any comments appreciated!

Rafter

liegerm,

I think you strategy will end up stinging you with high cash withdrawl fees.

There were/are some cards that do allow 'super balance transfers' to overdrafts or loan accounts. MBNA and Egg did do this - you may have to check the credit card boards to find out if they still do.

The way to avoid the fees (and get a longer 0% credit period) is to use the credit card to pay for everything you possibly can each month. The 'cash' you save can then be used to pay off your overdraft and then loan. You just need to be really organised and make sure you have the funds in place to repay the credit card balance when the 0% expires, or do a balance transfer at that point.

What kind of numbers are you talking about? What is the rate on your overdraft and loan? Is there an early repayment penalty on your loan?

R.

philiphirst18

I am also wanting to do this with a Halifax One card but they said it would go down as a "Financial Payment" in which I would get charged 22% APR which is not worth it in the long run.

Thanks in advance for your advice.

liegerm

Ok, thanks. The Egg card is the Egg Money card, right?

The loan is down to about £3650 with just over 4 years left to run (£90/month). I will have given the bank £1295 at the end of this period -- money which I think could be better spent or saved elsewhere. If can can transfer the loan to a 0% credit card, I can pay it off about a year earlier if I stick to £90/month (I realise I'll have to juggle the card balance again a couple of times but I think it's worth doing). There is an early payment fee of 58 days' interest (just under £50) which they insist is NOT a penalty in any way (I can post the emails from them if you like), but this is dwarfed by the potential savings.

The overdraft should be in an Alliance & Leicester account soon with 0% on overdrafts for a year so I plan on making it a priority to pay that off before the year is over (at the moment, I'm paying %9.9 interest on it).

Aside from that, I've started making other savings (changing phone tariff, ISP, canceling little unnecessary outgoings, etc) which all really add up. This is largely due to this website!

Inside three years, I plan on being completely debt-free and to actually have some savings in an ISA somewhere. I'm p***ed off with dancing to the banks' alluring tunes. They make money out of people who have little money to begin with and wrap debts up in a nice bow. Grrr!

Rafter wrote: »

liegerm,

I think you strategy will end up stinging you with high cash withdrawl fees.

There were/are some cards that do allow 'super balance transfers' to overdrafts or loan accounts. MBNA and Egg did do this - you may have to check the credit card boards to find out if they still do.

The way to avoid the fees (and get a longer 0% credit period) is to use the credit card to pay for everything you possibly can each month. The 'cash' you save can then be used to pay off your overdraft and then loan. You just need to be really organised and make sure you have the funds in place to repay the credit card balance when the 0% expires, or do a balance transfer at that point.

What kind of numbers are you talking about? What is the rate on your overdraft and loan? Is there an early repayment penalty on your loan?

R.