Financial Advice - Overdraft -v- Loan?

Found 6th Jun 2010
Hi can anyone please advise. I have 2 overdrafts and dont know whether it would be cheaper to put them into a repayment loan or whether to gradually chip away at the overdraft. I always think that my bank manager is on commision for getting people signed up for a loan, so was looking for some unbiased advice!
Community Updates
have u tried 0% credit card ?
Unbiased advice would be to pull out the paperwork/get on the phone, & figure it out yourself. Will be easy to figure out, & you dont cause 300 back & forth messages clarifying details with other posters had you been less lazy. Cheers:)
It depends on a few different things. Starting with how much your overdrafts are, what the interest rate is and how much you can afford to pay each month to clear it off. You will probably find your bank manager is on commission to sell you a loan as although the interest rate may be lower the term may be longer so the bank will make more money from you which at the end of the day they want to do.
They actually teach you this in GCSE business. Generally a loan is better unless your expecting to pay of the overdraft pretty soon.
Original Poster
Thanks everyone (well almost everyone!!), rep will be added
I used the Egg 0% credit card, its one of the only credit cards that will allow you to transfer your overdraft onto it.
As said before, check first what kind of interest rate you have on the overdraft, then how much on a loan. Usually on a loan you will have a lower rate which is of course good, but the downside is that you will have a credit arrangement fee or some other one off fee (whatever name they use for it) which has to be also taken into account. Ideally check how much you can afford to pay back each month, and then calculte how long the loan has to be to pay it back. Then calculate with the same monthly payments, how long it takes to get rid of the overdrafts. Then just pick the one which is 'shorter'. Done.
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