Pay off credit cards or overdraft?

horsepills

Hi

I'm looking to apply for a mortgage in August. I currently have an overdraft of £1000 (which I run up to the limit without going OVER it, every month!).

I also have 2 credit card debts - one has a limit of just £550 and the other has a limit of £700 - I am up to the limit on both.

I have a good salary, and no money issues, I've just allowed the credit cards to creep to their limits, though the min payments are always paid each month.

Now I've just received a £1000 bonus from work, I'm wondering should I clear my overdraft or just pay off the credit cards?? Any advice appreciated.

If I do choose to pay the cards, should I then close the accounts???

Thanks in advance

lee111s

Which attracts the most interest? That should determine which you pay off first.

If you're on a good salary then why do you have debts? Ypu need to clear all before applying for your mortgage really.

Thrugelmir

Settle the overdraft and don't dip into it in the future.

Then tackle your credit cards. Lenders can see minimum only payments. Will take you 30 -40 years to repay the debt at that level.

Always worth having a card for emergencies. So close what's not required only.

HiToAll

I think the overdraft first assuming that has highest interest rate.
I would also question you, not having money issues with you saying you as in your overdraft every month. Does that not mean you spend more than you earn every Month or just have gone into it in the past and due to level have never been able to get back out even if spend what you earn and no more.

horsepills

HiToAll wrote: »

I think the overdraft first assuming that has highest interest rate.
I would also question you, not having money issues with you saying you as in your overdraft every month. Does that not mean you spend more than you earn every Month or just have gone into it in the past and due to level have never been able to get back out even if spend what you earn and no more.

Thanks HiToAll - I don't spend more than I earn, but my partner chose to work part-time for a while looking after our daughter, so I dipped into the overdraft from time to time until it eventually reached the limit - since then I've just spent my earnings and no more. The wife recently returned to full-time so I'll be in a position to clear a few things - though we need to apply for a morgage soon, hence the question about which to clear before applying.