Overdraft vs debt

[Micdew]

So I have a personal loan and 2 credit cards
Its possible to apply for an overdraft that covers the credit cards and personal loan.
The monthly fee and the interest rate of the overdraft is lower than the rest, combined and separate (one cc interest is 2% less).

In my mind it makes sense to make use of the overdraft to pay off everything and pay off the overdraft overtime.

Is this to good to be true or am I missing something?

PS. Overdraft would be with FNB.

 

[Matt91]

There are companies that do this as a service, they consolidate your debt and work out your affordability. I think it is called debt consolidation - google it and see what's out there. Also just some advice; maybe cut-up your credit cards and make it difficult for yourself to get into more debt.

 

[Terence1983]

Making debt to pay debt or 'shifting' debt is never a good option in my opinion. I know from personal experience, been there and done that.
My 2c, Cut up the credit cards and pay the lower owing one as quick as possible while paying you minimum installment on the 2nd cred card and loan. Once the first one is paid, add that amount to the second one and pay that one off as quick as you can, once that one is done, add the amount you were paying on the credit cards onto the loan and pay that off.

 

[Terence1983]

There are companies that do this as a service, they consolidate your debt and work out your affordability. I think it is called debt consolidation - google it and see what's out there. Also just some advice; maybe cut-up your credit cards and make it difficult for yourself to get into more debt.

Those places are a rip off. Why pay someone to do something you can do yourself. Unless you are way over indebted and unable to make your monthly payments, then debt review is what its called and you will be blacklisted if you go that route so not advisable.

 

[Micdew]

There are companies that do this as a service, they consolidate your debt and work out your affordability. I think it is called debt consolidation - google it and see what's out there. Also just some advice; maybe cut-up your credit cards and make it difficult for yourself to get into more debt.

Can afford debt, would just like to pay it off at a lower rate. A person should only use Debt Consolidation service if you are in deep financial shhh as this would bugger you up financially.

 

[Johnatan56]

If under 55 days (or how long yours is) you go with credit card since the interest free period.

Otherwise overdraft.

Best is not to take debt at all, use credit card only to max out on benefits like ebucks, and the interest free period, use it as a debit card.

 

[Neuk_]

It makes sense to pay the debt off at the lowest interest rate as long as you have self discipline not to create more.

 

[Matt91]

Those places are a rip off. Why pay someone to do something you can do yourself. Unless you are way over indebted and unable to make your monthly payments, then debt review is what its called and you will be blacklisted if you go that route so not advisable.

Thanks for the heads up. Luckily I've never had to make use of these companies

@Micdew Assumed you were already deep in the poo - hence my suggestion. I agree with @Terence1983 cut up those cards and try flatten one debt at a time, borrowing from Peter to pay Paul leaves you exactly where you started.

 

[Micdew]

If under 55 days (or how long yours is) you go with credit card since the interest free period.

Otherwise overdraft.

Best is not to take debt at all, use credit card only to max out on benefits like ebucks, and the interest free period, use it as a debit card.

Not to take out new debt but to pay of current debt at a lower rate hopefully.

 

[Johnatan56]

Not to take out new debt but to pay of current debt at a lower rate hopefully.

Well if it's all currently on credit cards, it would probably be better to move it to overdraft.

I'm far from a financial guru though, hopefully someone on the forum can give you a better suggestion, e.g. If you have a bond, withdraw from that instead as usually lower interest rate.

 

[Terence1983]

Not to take out new debt but to pay of current debt at a lower rate hopefully.

Best is to put as much of your disposable cash towards paying them off one at a time.

Is that lower rate over a longer period? It may mean you will end up paying more over that loner period at the lower interest rate. Lots of things to factor in.

 

[RyanPCMR]

I would suggest that you check your credit score on the clearscore.co.za website first and check what offers they have for you based on your credit score.