Bit of a debt dilemma... paying off a debt!

MissMuppet

I have received a letter today from one of my creditors, my balance is £563.85, although a standing order of £16.00 went to them today. The letter is offering me a 50% reduction on the current balance which would be a full and final settlement of the debt, if I pay in 7 days.

So the balance is £547.85, 50% is £273.93.

I don't have the money but I am considering increasing my free overdraft to cover it, alternatively I could pay it on my credit card but this would create more interest than the overdraft I would think.

What would you suggest I do? A 50% reduction is surely something I should take up if I do it properly?

skylight

BUT if you add it to another debt then you will end up paying interest on the additional balance which, over time and if not paid off quickly enough, will end up costing you more in the long run that the amount you may save.

Lara44

Will your overdraft still be free with the extension? Will it continue to be free for the time you had planned to take to pay off the creditor. Otherwise 50% off sounds like a good offer...

Can you do any ebaying/quidcoing/mystershopping/matched betting or overtime at work to try to shift it? £270 is not too much

Good Luck!

MissMuppet

My overdraft is free at the moment, I think I get charged about £1 debit interest each month... I would be saving myself £273.93. I am trying to get my overdraft down but I just think I have an opportunity to halve one of my debts which surely is a good thing?

Annie_Fanny

MissMuppet wrote:

My overdraft is free at the moment, I think I get charged about £1 debit interest each month... I would be saving myself £273.93. I am trying to get my overdraft down but I just think I have an opportunity to halve one of my debts which surely is a good thing?

How is your overdraft free if they are charging you interest?

MissMuppet

LaraHoust wrote:

Will your overdraft still be free with the extension? Will it continue to be free for the time you had planned to take to pay off the creditor. Otherwise 50% off sounds like a good offer...

Can you do any ebaying/quidcoing/mystershopping/matched betting or overtime at work to try to shift it? £270 is not too much

Good Luck!

Yes my overdraft will still be free, and £270 isn't much... I worked out if I continue to pay them £15 a month it would take me 3 years to pay off the debt, if I do it this way I'm sure I can get my overdraft down within months.

I just want to make sure I'm not missing something here?

MissMuppet

Annie_Fanny wrote:

How is your overdraft free if they are charging you interest?

Sorry what I meant was I don't pay a monthly fee for my overdraft.

Annie_Fanny

Are you paying the creditors yourself or through an agency?

MissMuppet

Annie_Fanny wrote:

Are you paying the creditors yourself or through an agency?

I'm paying them myself, I have arrangements with them all and all interest is frozen.

climbgirl

It's impossible to advise on this without knowing the interest rates on both the credit card and the overdraft and how long it will take you to pay back the £273 you'll be putting on either of them.....