So my partner finished university several years ago and her interest free overdraft on a student account with Barclays is finishing. She hasn’t got the career she set out to do however her bank balance has slowly reduced, but still a long way to go (-£1000).
Is switching her account to another current account provider a good idea? Does anyone know of a bank that offers interest free overdrafts? Or what would be the best ploy to reduce this quickly and effectively?
After years of unsuccessfully trying to get rid of my overdraft (which once was a free student one), I decided to transfer it onto a XX month 0% interest credit card for a small fee. Definitely worth it.
Make sure it’s a “money transfer” credit card and not a “balance transfer” credit card if you do this.
According to everything I was told at the time when I did mine, and everything I can find online just now, the difference between a money transfer credit card vs a balance transfer credit card, is that you can use a money transfer credit card to pay off overdraft debt as you can transfer the money into your current account, which you cannot do with a standard balance transfer credit card.
If you used a balance transfer credit card the £100 would move over to the new card. Your old card would have a balance of £0 and your new card would have a balance of -£100. How much money that may or may not save you would depend on any offer that comes with that balance transfer.
If you used a money transfer credit card you’d get £100 (or however much you chose/was offered) paid into your current account which you could use to pay off the £100 on your other credit card if you wanted. Or you could keep it to do something else with and just have two credit cards with balances of -£100.
But assuming you did decide to use the 100 from the new account to pay off the orignal 100 isn’t essentially the same thing whether you do a balance transfer or money transfer?
I assume I am missing something but why would you use one over the other
Or do you always have to transfer 100% of the debt with balance transfer?
What about interest on the account surely that is still owed to the first credit card?
Normally the new card that ‘sends’ the balance transfer comes with a 0% interest period (sometimes up to a couple of years) and a fixed fee, so gives you time to pay down this new debt without charging interest.
Always pay at least the minimum amount every month or you’ll lose the 0% deal immediately.
Generally speaking you wouldn’t use a money transfer card to pay off another credit card - you’d use a balance transfer card.
Technically though, it is possible. Because once the money reaches your account you could do anything you like with it!
A money transfer offer is used to give people cash - so you could use that to pay off an overdraft on a current account, or you could use it to pay a builder or buy something from somewhere that won’t accept credit cards. Or maybe you want a lump sum to do some purchases and it’s a better offer with the money transfer than with a 0% period, etc.
With the information you guys gave about money transfers, I wanted to find a card that does balance & money transfers, with an interest free promotion.
Luckily it wasn’t hard to find this so we’ve gone ahead and signed up.
What we pay in transfer fees will be significantly cheaper than the daily overdraft rate, plus we get to transfer money from her credit card to extend the interest free promotion, and systematically break down the balance.