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pay off overdraft or start paying off CC?

missgstar26
missgstar26 Posts: 32 Forumite
in Debt-free wannabe
Hi guys

I hope I've posted this in the correct section!

My partner has just given me £1800 to help clear my debts. I've currently maxed out the overdraft on my current account (£1500).

I'm being charged about 125 a month for going into the red.

The first cc that i want to clear is for 2700, with about 70 interest per month.

So i need some advice-should i use the money to settle my OD and start afresh, or make a dent in one of many cc bills?!?!

Any help will be much appreciated!

xxx

Comments

  • Two9A
    Two9A Posts: 274 Forumite
    Generally, we'd need to see some interest rate figures to make a determination. However, it's highly likely that your overdraft is at a higher rate of interest than your CCs (that's generally the case), so I'd pay off the overdraft.

    Consider that if you pay off the overdraft, that's one debt cleared, and you can pile money in towards the CCs; if you pay down one of the cards, the overdraft is still there eating at your finances every month.
    Debts (26.3% remaining) - CC/BARC: [strike]2058[/strike] 100.00 @0%; CC/MBNA: [strike]1877.75[/strike] 0.00; Loan/SLC: [strike]10000[/strike] 7901.84 @1.5%; Loan/Per: [strike]1500[/strike] 0.00; Loan/HX: [strike]15000[/strike] 0.00
    Mortgages (94.7% remaining) -     NW: [strike]92516.94[/strike] 87565.40 @3.19%; HBOS: [strike]65599.57[/strike] 59106.45 @4%, [strike]69251.57[/strike] 68589.97 @3.49%
    Total amount of fail: Dangerous (223263.66)
  • Boozer
    Boozer Posts: 340 Forumite
    edited 7 March 2010 at 9:08PM
    Looks like you are paying about 30% on the CC, so as above, check the rate on the overdraft, can either you or your partner get a 0% CC and transfer the CC balances onto that?

    Edit: 125 a month for being overdrawn 1500?? do you have an agreed overdraft limit or is unagreed lending??

    Looking at it it certinly looks like get rid of the overdraft
  • tiff
    tiff Posts: 6,608 Forumite
    Part of the Furniture Combo Breaker Savvy Shopper!
    Dont forget overdrafts can be recalled at any time so another good reason to pay off the overdraft first.
    “A budget is telling your money where to go instead of wondering where it went.” - Dave Ramsey
  • JA1000
    JA1000 Posts: 620 Forumite
    OD - Do it NOW no brainer.
  • tiff
    tiff Posts: 6,608 Forumite
    Part of the Furniture Combo Breaker Savvy Shopper!
    Your challenge then is to manage your budget every month so you dont go overdrawn again.
    “A budget is telling your money where to go instead of wondering where it went.” - Dave Ramsey
  • DVardysShadow
    DVardysShadow Posts: 18,949 Forumite
    missgstar26 wrote: »
    My partner has just given me £1800 to help clear my debts. I've currently maxed out the overdraft on my current account (£1500).

    I'm being charged about 125 a month for going into the red.

    The first cc that i want to clear is for 2700, with about 70 interest per month.

    So i need some advice-should i use the money to settle my OD and start afresh, or make a dent in one of many cc bills?!?!

    Do you even need to ask? :rotfl::rotfl::rotfl:

    £1800 to the CC wipes 2/3 of the debt and saves you approx £45/month interest.

    £1800 to the overdraft wipes the debt and saves you £125/month.

    I could not possibly recommend one over the other.
    Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam
  • DVardysShadow
    DVardysShadow Posts: 18,949 Forumite
    Two9A wrote: »
    Generally, we'd need to see some interest rate figures to make a determination.
    OP has provided sufficient information
    Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam
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