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Many people putting their overdraft debt onto their credit cards

June 6, 2009 by admin  
Filed under News, News-Credit-Cards

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It has been claimed that many people are now turning to credit cards to get rid of their overdraft debt, with many putting their costly overdraft debt onto low interest or interest free credit cards in order to try and save some money on interest.

Industry experts have said that there continues to be an increase in the level of credit card debts, whilst overdraft debt and loan debt has been falling, with more and more people exploiting the ability to move their overdraft debt onto credit cards.

The British Banker’s Association has said that over the past year credit card debt has increased by around 8.5 percent taking it to £25 billion, and this is despite the fact that debit cards account for around two thirds of all plastic card transactions in the UK.

This suggests that an increasing number of people are moving their overdrafts debt onto low interest or interest free credit cards so that they can avoid the interest charges that banks apply onto overdrafts.

One official from a debt charity stated: ‘People have different attitudes to credit card debt and current account debt. They think it’s not going to affect them as much as an overdraft, which comes out of their monthly income and may affect their direct debits and lead to bank charges. They think they can rack up a lot more credit card debt.’

Another industry official said: ‘This deserves further study, but it looks as if people may be transferring overdraft debt to credit cards and may even be revolving 0% balance transfer deals, adding further debts to them as they do so.’

He added that if the trend continues it may become more and more difficult to transfer debt in this way.

Tags: loan, 0 balance transfers, credit card debt, interest charges, Credit Cards, free credit cards, debt charity

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Comments

One Response to “Many people putting their overdraft debt onto their credit cards”
  1. Dan says:
    October 8, 2010 at 2:17 pm

    Very useful article. In my experience overdrafts are good for short term money management, but can be deadly for long term financial stability. For years, I lived in me overdraft getting charged a seemly insignificant £20 a month, but it all adds up. Found a really useful site talking about dealing with UK based overdraft debt and your legal right when dealing with banks- http://www.debt-line.org.uk/unsecured-loans-and-bank-overdrafts

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