Credit Card Debt Vs Overdraft

hanky1985

Hello everyone,

I just wanted some advice if I may please about my current situation. I have some credit card debt (all this debt I've moved to a 0% balance transfer account) and I'm currently living in an overdraft of £1500. I am wondering how to put myself in a better financial position. Is it better to:

1) Continue to live in this overdraft (so going back to £0 each time I get paid), and gradually pay off my credit card via monthly payments - so in effect I have two forms of debt

or

2) Pay off my overdraft with a credit card, move this balance then to 0% balance account so I will effectively be in credit but owe more on credit cards?

I'd be so grateful if someone could advise! Many thanks!

connormill

I think the general advice is to pay off the highest interest rate first.

So, if your overdraft is of a higher interest rate than the cc get it paid off first.

but for overdrafts its not all interest, my bank (Lloyds TSB) for example charges 19.3% AER PLUS a £5 a month fee, so even if the cc is a slightly higher APR, you would have to take your OD usage fee into account.

Someone more knowledgeable might correct me, but there's my attempt at advice.

Hope it helps