should I use savings to pay off overdraft?

jlouok

Hi guys,

New to this site, can't seem to find an answer to my query, although there's so much, it's probably somewhere, so sorry if so!

I have a small overdraft compared to most of £350, however I have savings of around £390, should I use them to pay the overdraft off and be completely debt free? I am mostly in my overdraft each month, the rate is about 19%

However I started the savings to try to save towards a deposit for a property, it's only £65 a month over 5yrs, so isn't much, but it's something!

And from June/July I will have one less direct debit which which give me extra money, so maybe I should just wait until then and pay the overdraft off gradually?

Any views are appreciated!

agrinnall

I'd pay off the overdraft now as long as you have the discipline not to go back into it. Your £390 savings are earning you less than £10 a year (on which you will have to pay 10% or 20% tax unless it's an ISA) while your overdraft could be costing you up to £65 a year. When you get the extra money in June/July put that into your savings account too and it'll soon start to build up.

jlouok

Thanks for the advice! Makes sense when you put it like that! Just don't want to see my savings go ! And yes, will definitely need to not go back into an overdraft!

poorgirl-54

well i have overdraft which i use every month for years and have savings to but i dnt pay it off, cos i only pay a small amount compared to the loan.
Overdraft- 1k and usually £10 ish with first direct