Pay off Credit card or Overdraft first

Andyt1981

I've recently inherited some money which will enable me to pay off a large chunk of my debts (but sadly not quite all of them).

I've got £2000 left to spend on debts.

I was wondering if generally speaking its better to have an overdraft or a credit card debt?

I have an account where I pay a fixed charge of £10 per month for a £1900 overdraft.

I also have a credit card with 0% on balance transfers until 1st August 2013 (2.9% fee).

The total remaining debt is about £9,625 and I can pay £500 a month off. Is it best to put everything on the 0% card, and try and get a new 0% deal in August, or shall I pay off the overdraft now.

Thanks

FireWyrm

If you can throw £500 a month at your debts on top of having £2000 to use, I would do the following :

1) £500 a month to your credit card from February (£3500 paid), this means more chance of sliding onto another card in August. Leaving a total of £6125 to pay at (hopefully) 0% for the next 6 to 12 months. Clear the remainder of the debt in 13 months and be done with it.

2) Put £1900 of the £2000 to the overdraft and pay it off completely once and for all.

FallenArcher

Hi Andy,

I agree with FireWyrm - use £1900 of the £2000 to pay off the overdraft. I have found overdrafts a much worse form of borrowing compared to loans/credit cards as it's so hard to see progress, and I always just end up slipping back into it again. The *best* thing I've done was pay off my overdraft and then (and this is important!) get the facility removed - otherwise there is a temptation to let it creep back up again.

Use the final £100 towards the credit card and then keep ploughing away at it. I'd thoroughly recommend checking out the 100 ways to make £80 thread as it may help you get it paid off even quicker.

Good luck.