Paying off overdraft with 0% credit card

[reikizen]

Has anyone tried to do this? My o/d is £4000 and I never seem to be able to get it down. Would it be possible to use an 0% credit card to remedy the situation. I pay about £50 per month in interest at the moment.

Well, practically speaking, to make it work, you'd need to consider two things:

1. Are you living within your means? If not, you'll find that the old OD will become a credit card debt, then you'll have a new overdraft caused by living beyond your means.

2. Can you afford to increase your payment? £50 per month payment, will take 6½ years to clear. So, again, to make it work, you'd either need a 7 year fix (very unlikely) or be able to guarantee that you'd be able to take out a similar deal in the future.

Having said that, people do do it.

The really important thing is knowing why you can't get your OD down, and not taking 'sticky plaster' approaches that will just leave the root cause there.

I'd add to what Lougle has said... I don't think you can use a CC to pay off an OD or other cash loan. Mostly they offer to take on balances on other credit cards and they usually charge a fee for balance transfers. An alternative could be to look at converting your overdraft - which usually have very high APR % - into a fixed term loan at a lower APR %. A £4000 loan taken out over 5 years @ 7% interest would cost you around £80/month, for example.

WARNING.... If you go the route of converting an OD to a loan you have to be 100% certain that you can meet the monthly payments 100% of the time. If you can't meet the loan payments because you're living beyond your means, the danger is that you will build your overdraft back up or you start using credit cards and it is very common for people to end in a worse mess than they started. I can't stress that enough.

If you can't see a way to pay off the OD, if you can't find more than £50/month and/or if you have other debts or credit card balances you may benefit from talking to the CAB, CCCS or National Debtline. They are free services and could give you some impartial guidance and different options.

I looked into it on moneysaving expert and they say the only one who is doing it at the moment is virgin, but the limit is only £1,300 so not very helpful and you pay a 4% fee.

Yes you can, although not all credit card companies offer it. I'm with Virgin and I paid off a £2,000 overdraft using their 0% current account transfer offer. I had to pay 3% balance fee on top of this. I then set up a direct debit to pay £100 per month off the credit card and I'm now nearly clear (after struggling to pay off this OD for 10 years). Amazon credit card also offer the 0% interest on money paid into current account. Many don't though (they will only do balance transfers) so you will need to shop around