Pay off credit cards or overdraft?

bertiewhite

I have 3 credit cards which I am trying to pay off by moving the balance between them using 0% balance transfers. However I also have quite a bank overdraft which attracts a monthly fee. Should I aim to be back in credit with the bank before attacking the credit cards or the other way round?

greenlightluke

It is usually better to pay off whatever attracts the highest APR.

Banks can however, demand that you pay your overdraft there and then - so in my opinion I'd pay just over the minimum on the CC and aim to get out of the overdraft ASAP.

Mirno

If the credit cards are 0%, and the overdraft is a fixed fee then the best (mathematically) course of action is to save up enough to clear the overdraft then clear that. Then do the same with the credit cards.

However - if you're not good with having savings (are you likely to spend it because it's there?) - saving isn't the best for everyone.

If the overdraft fee is variable (depending on how much you use) then put money towards it whenever you can as soon as you can.

Mirno

Thrugelmir

In the short term. Pay the minimum on the cards while letting your overdraft clear itself (i.e. spend less).

wellsy07

I cleared my expensive overdraft by having a 0% purchase card which I did my monthly spend on instead of using debit account, (effectively BT overdraft to the card)
Then I cancelled overdraft to stop temptation and then focused fully on getting balance of credit card down as not paying the harsh overdraft charges

Depends on how big your overdraft is to the limit on your card wether you could try this method?

This helped me get back on the right path, and using the help of People on here
Iv never needed a overdraft in 3 years, but Yiu do need to remain disaplined
Paying the card balance down before the 0%finishes, or if your lucky like I was
Switched the remaining balance to another card and its well on the way to being gone!
Good luck!

[Deleted User]

greenlightluke wrote: »

...
Banks can however, demand that you pay your overdraft there and then - so in my opinion I'd pay just over the minimum on the CC and aim to get out of the overdraft ASAP.

Presumably this overdraft is on an account that the OP does not regularly credit e.g with their income, so the chances of the bank calling the O/D in is high.

bertiewhite

Thanks for the replies. Just to confirm, my overdraft is on my main current account which I pay my wages into and I have been a customer with the bank for 24 years so I doubt they'd demand the overdraft is cleared.

I am due to work abroad for a few months in April which will mean extra pay AND I won't be spending either (fuel, food etc.) so I've worked out that the overdraft should be cleared by the time I get back.

I just didn't if I should be ploughing the extra into the cards during this time rather than clear the overdraft?

Thanks again.

[Deleted User]

bertiewhite wrote: »

Thanks for the replies. Just to confirm, my overdraft is on my main current account which I pay my wages into and I have been a customer with the bank for 24 years so I doubt they'd demand the overdraft is cleared.

I am due to work abroad for a few months in April which will mean extra pay AND I won't be spending either (fuel, food etc.) so I've worked out that the overdraft should be cleared by the time I get back.

I just didn't if I should be ploughing the extra into the cards during this time rather than clear the overdraft?

Thanks again.

In which case any income you receive will go to pay off your overdraft

bertiewhite

Starline wrote: »

In which case any income you receive will go to pay off your overdraft

Yes but I didn't know if I'd be better paying loads more on the cards each month with the extra pay and keeping the account in the red or even half & half (just a bit extra on the cards)?