Does transferring your overdraft to your credit card make sense?
Figures from the credit card industry have highlighted a growing trend with many credit card holders now looking to transfer their overdraft debits on to their credit cards. While this may seem a very expensive route in the short to medium term, it would appear that many are making use of a 0% balance transfer offers, which are starting to reappear in the market again.
While for those who are able to pay down their credit card debts in the short to medium term, the option to move your overdraft could be beneficial, there are risks involved. In general, credit card interest rates have historically been significantly higher than authorised overdraft rates. Therefore, while you may save money in the short term with the 0% balance transfer offer, unless you're able to cover your regular repayments well into the future there is potential for the debt to grow.
It is interesting to see some form of competition and some form of life returning to the UK credit card market, although there are concerns that as and when the UK economy does recover, more and more people will use this particular financial instrument to the max.
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