Is paying off my overdraft more important than my CC?

CupcakeLisa

Hi,

We are currently clearing our debts with the hoping of applying for a mortgage in the next year.

I have just had a thought....we have been clearing our credit cards first as they cost more interest than our overdraft but should we be doing it the other way

Am I better off having no overdraft and some credit card debt or no credit card debt and some overdraft

I think we need around £8k for a deposit but unsure how to strike the best balance between getting as much debt cleared and getting a house asap

CupcakeLisa

noone able to help?

R_P_W

CupcakeLisa wrote: »

noone able to help?

Impatient much?

Yorkie1

It is Sunday tea time and it is only 66 minutes since you posted your question.

Have some patience.

What are the interest rates?

CupcakeLisa

My CC is 26% and my overdraft is £1 per day

ValHaller

And how many days are you in your overdraft each month and what is the average amount when you are overdrawn? For a rough calculation of the Interest Rate .....

CupcakeLisa

I am in my overdraft everyday around £1000 min £2000 max - we could pay it off if we stopped paying over the min to our other debts.

Both myself and my husband have overdrafts and credit cards. When we want to buy we will have around 3k debt left. I just dont know which debt I should leave

I will keep paying it when we start looking for a house and may have it cleared by then if I can up my income

CupcakeLisa

oops double post

I know the ideal situation is clear the cc and I will keep aiming for that

Thrugelmir

Credit card first then the overdraft.

With only a 10% deposit you'll need a good credit profile. So aim to clear your debts.

If purchasing a property is an aspiration. Then keep a record of what you spend. Surprising how much is frittered away. Every penny saved will take you closer to your goal.

YorkshireBoy

CupcakeLisa wrote: »

I am in my overdraft everyday around £1000 min £2000 max

An average of £1500 for 365 days a year?...that's circa 24% APR, so only marginally cheaper than the credit cards.

Using an overdraft, especially constantly, will be viewed more negatively (by mortgage lenders particularly) than carrying credit card debt in my opinion, because it shows an inability to manage your day-to-day/month-to-month finances.

If you still choose to pay down the credit cards, why not change banks to one with more favourable, ie debit interest-based, overdraft T&Cs?

property.advert

Living in overdraft land with debts on credit cards means you cannot live within your means. Why on earth would a lender even consider lending you large sums of money ?