Which to pay off first O/D or CC?

robbie1973_2

Hi fellow money savers. I'm new here and I apologise if my question is in the wrong forum.
I'm hope some folks can help advise me with this one. I'm getting a bit muddled (I'm not the brightest spark!)

Situation: I have a bit of cash flow problem this month after my car was stolen and I had to use Aqua Credit Card and Overdraft combination to buy another car to get to work.
.Balance is now -466.00 on the card and -£400.00 on O/D.
.Previously the Credit Card was zero because I pay it off in full any time I use it.
.Due to child support and other regualr bills and spending, I'm having to use the overdraft again 2nd or 3rd week of the month and I'm generally at the max by the time monthly salary day arrives. I'm ok with that and was working to get complete release from the overdraft until this car thing happened.
.The amount of money I have left, after paying regular bills before entering debt is usually is around £200.00, depending on how much I spend on food shopping.
.Also I somehow missed a £100.00 Countil Tax payment last month, so they want two months worth this time. (Didn't help that the Council changed their bank account details grr)

Problem:
I have been caught short here with no contingency or other savings or cash at all. Car insurance will take months to cough up.
If I pay off all the credit card this month, I'll avoid the 49% interest. If I also pay off the overdraft, I'll be back into it in a matter of days to get a tank of petrol. What I really want to avoid, is the credit card replacing the Overdraft (which charges a min £6.00 and i dont know the interest. It's RBS basic account). I really don't want to have to dip into the CCard habitually like I do with the overdraft, but it's credit building card, so maybe it might be useful to ditch the overdraft and use the card instead? I don't know, I'm just adding that as the thought passed through my thick skull while typing this.

Question: What's the best way to handle this situation?
Best meaning least expensive and cleared in the shortest possible time whilst still surviving? I suspect it's going to be a screaming "Clear the credit card for lawds sake!" but if do that I won't be able to pay back as much on the overdraft.. catch 22?

I welcome all advice and opinion in this matter,
Thank you for your time,
Rob.

planteria

first thought is to ensure that you do make the credit card minimum payment.

and i assume that your salary will come into your current account & at least temporarily wipe out the debt? beyond that point it's really a matter of just looking at the rates on each debt...and i assume throwing as much as you can at the higher-rate card debt?

robatwork

Can I suggest the forum Debt Free Wannabe for your question

robbie1973_2

thank you for your reply and coments planteria I did some investigating. the bank wants to charge 1.52% per day on outstanding balance for Overdraft. Am i mistaken in thinking that they will put interest on interest? So £100.00 will become £101.52 on day 01, and the next day it will be 101.52 + 1.52% interest etc etc? that means i could pay £228 in interest alone over the courzse or 29 days.. does that seem right? See my screen shot of my spread sheet. ooh. i'm not allowed to post a link. i have put the screenshot on my site and pasted the contents below in text format.

screen shot here : pchealthinfo co uk /odinterest.JPG

RBS SELECT INTEREST Calculator for ARRANGED OVERDRAFT percent over all on original loan
Balance Interest Rate Balance with Interest Cost of Interest for the day Running total
400.00 1.52 406.08 6.08 6.08
406.08 1.52 412.25 6.17 12.25
412.25 1.52 418.52 6.27 18.52
418.52 1.52 424.88 6.36 24.88
424.88 1.52 431.34 6.46 31.34
431.34 1.52 437.89 6.56 37.89
437.89 1.52 444.55 6.66 44.55
444.55 1.52 451.31 6.76 51.31
451.31 1.52 458.17 6.86 58.17
458.17 1.52 465.13 6.96 65.13
465.13 1.52 472.20 7.07 72.20
472.20 1.52 479.38 7.18 79.38
479.38 1.52 486.67 7.29 86.67
486.67 1.52 494.06 7.40 94.06
494.06 1.52 501.57 7.51 101.57
501.57 1.52 509.20 7.62 109.20
509.20 1.52 516.94 7.74 116.94
516.94 1.52 524.79 7.86 124.79
524.79 1.52 532.77 7.98 132.77
532.77 1.52 540.87 8.10 140.87
540.87 1.52 549.09 8.22 149.09
549.09 1.52 557.44 8.35 157.44
557.44 1.52 565.91 8.47 165.91
565.91 1.52 574.51 8.60 174.51
574.51 1.52 583.24 8.73 183.24
583.24 1.52 592.11 8.87 192.11
592.11 1.52 601.11 9.00 201.11
601.11 1.52 610.25 9.14 210.25
610.25 1.52 619.52 9.28 219.52
619.52 1.52 628.94 9.42 228.94 57.235 Percent <<--??

Sure. feel free to move it RobAtWork, and thankyou for your help and advice too

YorkshireBoy

Interest compounds monthly, not daily, on the overdraft.

So you'll accrue interest each day at:

Closing balance x 18.28% / 365

Once a month the sum of all these daily amounts is added to your account, and if you're still overdrawn it will then compound (ie you'll pay interest on interest).

In terms of what to pay first it's a case of working out the cost per day for each and concentrating on the highest value. Normally this is easy if your overdraft only charges debit interest (APR = EAR). However, it's not so easy if the overdraft charges a daily fee. Does the Select account charge such a fee?

Joe_Bloggs

If the Nationally owned RBS are charging 1.52% per day then it is a national disgrace. A yearly rate of 246% is far beyond usury in my view.

A car can break down costing thousands to repair. Being stolen may have been the prefered option. It is necessary to build up savings for the possibility of future emergencies.

What can we do when we are compelled to bail out RBS who got fined 450 million last week
J_B.

grumbler

Joe_Bloggs wrote: »

If the Nationally owned RBS are charging 1.52% per day then it is a national disgrace. A yearly rate of 246% is far beyond usury in my view.

How did you convert 1.52% to 246%?

That said, I think the OP is mistaken and 1.52% is a monthly rate, not daily.

planteria

i suspect you are right, and that the card debt will be most costly of the two.
either way robbie, do whatever you can to throw money at the problem. do some overtime/do some extra work somewhere else/sell something on ebay/borrow from a friend?
the sums involved are not huge, which is good news. but i very much appreciate that a small debt is a significant if someone can't afford to repay it.