Where to pay off £500?

DD265

So I overpaid on my tax last year by £569.60 and I have a cheque from HMRC that I'm going to pay in tomorrow. What is the best thing to do with it?

I have:

Overdraft
The first £1500 is interest free, then it's 1.30% on anything over this. I will also have a monthly charge of £5 for usage when I exceed the £1500 mark (that would be every month and my salary does not take me into credit). My limit is £2000 and I'm currently £1844.21 into this but all my expected expenditure for the month is paid.

Credit Card
The interest rate on my card is 24.9% (it went up at the start of July). I currently have £568.37 on the card, haven't missed any repayments. My statements run from the 14th to the 13th every month.

Loan
I have £2765.55 on my loan at present, with an interest rate of 24.9%. My repayment amount is £100.76 per month and there are no penalties for paying the loan off early.

My plan, this lump sum aside, is working on the credit card, then £500 of the overdraft (down to the interest free) and then the loan. I have been stretched a bit thin so I don't feel like I've made much headway. Another option would be to put the money to one side (car insurance due in October) but I feel that i would end up dipping in to it, so I am leaning towards paying off my credit card completely.

Where would you advise making the payment?

bottleofred

I would clear the credit card, as it has an interest rate of 24.9 & will feel like you have achieved something, providing of course that you don't use it again.

DD265

Thanks. I daren't get rid of it completely in case of an emergency because at this time I don't have any money to one side - I'm concentrating on paying things off first. I'll have to find an inconvenient place to leave it at home to remove the temptation.

ixia

I would pay it to the credit card, then you have got rid of one debt. Put the money you would have used to make your payment to CC for the next 2 months to put towards you car insurance.

Than you will be able to make a dent in your overdraft if you try not to use your CC. Good luck

mandz1

I would pay off the credit card, it will make you feel good paying off a debt and it has a higher interest rate than your overdraft.

DrSqueeze

Definitely agree about clearing the credit card. By all means keep it for emergencies but, as you've suggested, lock it away and avoid using it except as a last resort.

toothfairybuttkicker

OMG clear the card then burn it!!!

DD265

Thanks for the advice everyone. The cheque was paid in today so as soon as it's cleared I'll clear my credit card :beer: