Should I Get a Credit Card or Extend My Overdraft?

Life has a knack of throwing some us some serious curve balls when it comes to finances and money matters. One month all things seem to be going your way, you've received your bonus and have used part o it to pay off more than usual on your flexible mortgage, treated you and the family to a posh dinner and had some left over for yourself.

This month however the overtime’s not on offer, the clients won’t want to sign up to what you have on offer so your omission is down and on top of it all the phone bill is through the roof, the kids need new school shoes and Christmas is  on its way.

Your family could seriously benefit from a few extra pounds, it would ease the purse strings a bit and give all of you some breathing room to enjoy life again. As mentioned, life really does like to throw you some curve balls, especially at times when you least expect it. The question many people that find themselves in a tight financial spot ask is; how can I get my hands on a few extra few pounds?

Do you borrow from friends and family knowing it could quite easily turn a good relationship sour or do you look to take out a loan for a few thousand pounds when all you need is a few hundred or do you look to get a credit card, then again is simply extending your current account with an overdraft the solution? With so many options it can be a bit of a mind boggle sourcing the funds that could offer some much needed financial relief.

By taking the time out of your hectic schedule to do a spot of research into the world of credit can save you a considerable amount of money while providing you with the extra funds you so desperately need. Comparing the market nowadays is relatively easy, all you need is access to a computer, from there you can compare the various lending institutions and the rates they offer their customers. With that information you will be in a position to make a fully informed decision as to whether your situation is more conducive to a credit card or whether applying for an overdraft id the best option for you.

If you already have an overdraft, you can make an application to increase the amount of overdraft available to you. The rates on offer to individuals, whether it’s an overdraft or a credit card vary considerably so it really is vital to do research if you want your money to work for you. Consider the 0% credit cards on offer by MBNA’s Platinum card, it’s first perk is the very fact that it offers 0% on balance transfers however its rate stands at 15.9% APR. Compare that to the credit card on offer by Capital one, who also offer 0% on balance transfers however their APR rate is a fair bit lower coming in at 12.9%.

Now that you have seen that there is a considerable difference between two credit card providers you can appreciate just how important it is to look around before signing on that dotted line. Similarly there is a difference between overdraft rates and charges made by the banks in question.

Natwest have two different levels of overdraft on offer, taking advantage of their private credit zone overdraft will cost you 13.5% EAR (Effective Annual Rate). That said if you were to make use of their Advantage gold credit zone will have an EAR of 18.49% applied to the amount borrowed. That said, Nationwide offer their customers an EAR of 12.9% which when compared to the Advantage credit zone from Natwest works out at a much better deal for you and your funds.