Should I pay off overdraft of credit card first?

pilky · 6 August 2011 at 1:10PM

Hi guys, I may have a couple of thousand coming my way next month and I am going to pay it towards paying off my debts. I have a credit card and an overdraft (both around 16% interest each month) and I dont know which one to pay it towards and any advice would be appreciated.

I have tried to transfer my credit card to a 0% but I just cant get credit at the moment - I dont know why because I have a good credit score - I have spoken to experian and the only thing they said why they dont think I can get credit is because I am using over 70% of my limit. I explained that the reason why this is is because I have paid off 4 credits cards and closed the accounts down.....anyway I am digressing here.

Any ideas?

theoretica · 6 August 2011 at 2:31PM

Sometimes small overdrafts can be very expensive because of the monthly fees. (£10 a month fee becomes a high percentage if you reduce borrowing from £1000 to £100.) If you have one like this and are in a position to pay it off at one go it might make sense. So long as you won't slip back into your overdraft.