Overdraft Or Catalogue?

bubblesbrian

I am always in my overdraft of £500. I owe the catalogue £400.

If I carry on paying all my bills as set I should come out of the overdraft more or less for good in November (obviously longer as unplanned spends always occur).

I can afford to spend more on my monthly catalogue outgoings, though it would make me stay in my overdraft for longer. Though if I clear my catalogue first then obviously the money can go to the overdraft.

What's your opinions?

jayn_3

Clear which ever charges the highest interest rate first

bubblesbrian

jayn wrote: »

Clear which ever charges the highest interest rate first

That is an idea though the catalogue interest is already applied so the amount won't creep up, and the overdraft is free.

cobblers_boy

Hi

I would assume the catalogue is billed monthly and as such they will apply further interest next month. In line with the previous comment clear the highest interest debt first which given the overdraft os free must be the catalogue.

CB

bubblesbrian

cobblers_boy wrote: »

Hi

I would assume the catalogue is billed monthly and as such they will apply further interest next month. In line with the previous comment clear the highest interest debt first which given the overdraft os free must be the catalogue.

CB

I do believe the interest is applied on top of the product/s when you buy them. But I will have to check on that one.

cobblers_boy

I think they just up the prices originally. Daughter had a catalogue and they were charging 40%!!!!. Got that paid off when I found out and she can sort it out with me later.

motoko

If you won't have to pay any more interest on either of them then its down to your personal preference. The only advantage I can see either way is that if you pay off the catalogue first, then you can close the account with them, thus reducing your available credit which looks better on your credit report. However this is irrelevant unless you are planning on applying for more credit.

Personally I would pay off the overdraft first though, and just pay the catalogue off at the original rate, and this is why: If they have the cheek to charge the interest upfront, then I'd want to make sure I owe them the money for the full time, otherwise you've paid effectively paid them a higher rate of interest. I know it doesn't make any difference to your finances, but its the principle of the thing, you don't want to do them any favours when they charge such outrageous rates. On the other hand the bank is kind enough to lend you money for nothing, and you can show your appreciation by paying them back when you can.

Alternatively you could put your money in a savings account and make some interest, pay back the catalogue company at the agreed rate, and keep the money from the bank since its not costing you anything. But that's up to you of course.