pay off overdraft or credit cards

seh567

Hi

I am being asked by my bank to consider changing my £3k overdraft (over the limit) to a personal loan. However my parents have offered to pay this off. However I have 2 credit cards with a balance of £3k each which I am struggling to pay off, I can't afford to pay more than £65 off the balance each month.

Can someone advise if it would be better to pay off one of the credit cards rather than the overdraft?

LookingAhead

I am sure other people will be along soon to get to the bottom of this one.

What came to my mind immediately were the questions of:

* How much over your overdraft limit are you?
* What is the APR on the overdraft?
* What are the APRs on your credit cards?
* Could you pay off a big chunk of each of these outstanding debts to take some pressure off then use the 'snowballing' approach to reduce the highest debt first?

Hope this helps.

LA

savingholmes

seh567 wrote: »

Hi

I am being asked by my bank to consider changing my £3k overdraft (over the limit) to a personal loan. However my parents have offered to pay this off. However I have 2 credit cards with a balance of £3k each which I am struggling to pay off, I can't afford to pay more than £65 off the balance each month.

Can someone advise if it would be better to pay off one of the credit cards rather than the overdraft?

I think you need to pay off your most expensive debt first. Use the snowball calculator at the website whatsthecost to do this. This should effectively make the decision for you to some degree. You may need to pay off some of your overdraft to bring it back within limit however.

As someone who prior to this website repeatedly got in debt thro not actually taking time to understand and deal with the underlying reasons behind the debt in the first place, can I respectfully suggest that you also use the website makesenseofcards to work out your soa (statement of affairs) showing all your income, outgoings, debts and liabilities - format it to post on the mse website (this one) and post it here. We then may also be able to make some constructive suggestions on where you can potentially change your spending habits for the better.

Also look at the £10 a day challenge - to encourage you to make some extra money a month to pay off debt with... Good luck!