How to use a credit card without a balance to save money on your bank account?
There’s no need to worry about being overdrawn and you’ll still be able to get a good rate for your purchases.
But before you buy anything, here’s what you need to know about overdraft fees, the best ways to avoid them and the best credit cards for the job.
How overdrafts workYou’ll find overdraft charges when a bank’s balance exceeds the value of your current account balance.
You’ll need to pay these fees in advance.
If you’re paying cash on your debit card, you’ll have to pay a fee for each payment that exceeds the total balance of your account.
That means if you’ve paid £10 for a cup of tea, the balance on your card is £10, not £10.20.
But if you pay with cash, you’re charged a charge for each additional £1 you’re over your current balance, even if the card hasn’t been used in a month.
If the card you’re using doesn’t have a balance, you don’t need to take a fee, although you might find you have to put a £1 charge on your balance each time you use it to pay off your overdraft.
The balance on a debit card is only as good as the cash you’re willing to use it for, so don’t expect to save much by paying with cash.
If there’s a limit to how much you can withdraw from your card, this will reduce the amount of money you can use it with.
If you’re overdrawn, the amount you can pay out will also decrease, although it won’t be as much.
To find out what charges apply, see our guide to how to avoid overdraft fee fees.
Credit card overdraft charge ratesThere are different ways to pay for a credit limit.
Some credit cards allow you to use up to £30 of your credit limit each month for free.
Other cards limit the amount that can be used for free or reduced rates.
Here are the best cards for saving on your debt, depending on your financial situation:The best credit card for the workYou might have a good idea of the best rate you can get with a credit, but you might also be tempted to just pay for it and be done with it.
There are two ways to save, one with a cheaper rate and the other with a better rate.
Here’s how to compare rates to make an informed decision.
How to pay with credit card overdrawsIf you’ve recently signed up for a card, there’s no charge for using the card to pay the balance of a previous card you have on the account.
So you’ll need a balance before you can begin paying off the balance.
But how does this work?
Credit cards charge a £2.00 fee for overdrawting, and it doesn’t need that much money in your account to be charged.
The fee applies to the amount used on your account and is waived if the balance is lower than £30.
This means you can put your card away in your pocket, then pay off a card balance on it.
It won’t affect the amount paid or how much interest you pay.
Credit cards are charged at 0.10% interest, so if you’re planning to pay interest on the balance for two months, you’d be able pay off the whole balance with just £2 of overdraft interest.
However, this doesn’t mean you won’t have to wait for the balance to clear before you’re able to withdraw the money.
This is where overdrafting fees come in.
You’ll need £1 of overdraw fee each month until the balance clears.
The fees apply even if you haven’t used the card in a year, meaning you can’t pay off one balance at a time.
But that means you won of course be able spend more money on other things, including a car, while you wait for your balance to come down.
For example, if you want to buy a new car, you could pay off that balance in one go and pay the rest off at a later date.
The best banks for your creditYou’ll also find that the best banks offer the best deals.
They’ll offer the lowest interest rates, most convenient card payments and most free cards.
You can also sign up for free to a range of cards with no overdraft or other fees.
The best cards are the ones with no monthly fee, which will be the case if you already have a card on the platform.
You won’t pay fees if you have a variable monthly card, which means you don.
But you’ll pay interest charges if you do, and you may also be charged if you move your bank to a variable-rate card.
Read our guide on how to save with credit cards to find out which cards are best for you.
How long you can keep using your cardAfter you’ve started paying off an overdraft, you may want to think about keeping your card.