Credit card or mortgage current account?

Ernst

I'm wondering if anybody can offer me some advice? I am unemployed at the moment (long term) and have a credit card debt of just under £5000 with Bank of America (Amazon). I have a mortgage with Barclays and I have a mortgage current account with an overdraft facility of £16000. I want to clear my credit card debt a.s.a.p. At the moment, I'm paying £150 per month. I was wondering if it would be sensible to carry on like this or whether I should pay it off using my mortgage current account. I'm so confused by the interest rates. Any help would be much appreciated.

MallyGirl

you need to state what the APR on the CC is and what your mortgage rate is to start with.
If you increase your mortgage by £5k how do you intend to pay that off if you are not working? Failure to pay your mortgage could result in you losing your home. Generally people do not recommend converting unsecured debt (like cc) to secured debt.

Ernst

Thanks for your reply, MallyGirl. I wouldn't actually be increasing my mortgage, as it is a current account with an overdraft facility and the interest rate is 4%. The interest rate on the credit card is 16.9% APR variable. I don't know if the 4% on the bank account is just 4% or if the APR is higher. The problem is that I just don't understand the interest rates

grumbler

16.9% APR means that your £5K debt costs you about £5000*16.9%=~£850 p.a.
From £150 you are paying only about a half goes towards repaying the debt. The rest is the interest.

Your "mortgage current account" is likely to be much less expensive, although the interest rate isn't necessarily the same as for your mortgage.

E.g. my Barclays' mortgage rate is currently ~1%, but it would cost me ~5% to use my mortgage reserve account for borrowing: http://ask.barclays.co.uk/help/mortgages_homes/reserve_work.

Unlike a CC debt, a mortgage reserve overdraft is a secured debt.