Is it better to have credit card debt or to use my overdraft

enthusiasticsaver

As most overdrafts are charging 40% interest and can be called in at any time I would not recommend that as a way to pay off the credit card.

Emmia

Catsacor said:

Hi @Emmia demonstrating good money and credit management is by repaying what you owe in a way that reduces the balance significantly.
The Credit Reference Agencies never offer better advice than the voice in your head that says 'stop paying all that extra interest by not paying enough each month'.


I'm now going to get up onto my box and preach to all and sundry/whoever will listen......😋😆

When being tempted to buy something dear and putting on credit think of how many hours you'll have to work to pay that off.....if it's more than a months hours ask yourself if it's really worth it.

Think about the cost of that item when the interest gets added to it....... it suddenly makes that thing not such a good buy.

I know how CRAs work, however I'm not in debt so I don't "need" credit, and anything I do spend on my credit card is paid off in full every month - more credit/a higher limit is a bit pointless as I have no desire for it - although I'm sure the credit card company would like me to pay interest...

Your point about how long you have to work to buy something is something I agree with. I also like to think about the opportunity cost of buying things, since the money we have is ultimately finite - buying something today, can stop you buying something (better?) tomorrow.

High limits can give the impression IMO that people can "afford" the debt, when the reality is that they probably can't.

sleepyjones

I thought using an overdraft always looks bad? (Overdraft debt is worse than credit card debt?)

Don80

D3xt3r5L4b said:

Don80 said:

I was once told having about £8000 available on a card(s) was good. 

By whom...??

Financial advisor - went with a family member a couple of years ago as they were sorting some things out and wanted a second pair of ears.  She said having too low available credit was bad, as was too high.  She said if you have about £8000 available, that would make you more attractive to many lenders.  I saw something similar on one of the CRA sites that suggested £5000.

D3xt3r5L4b

Don80 said:

D3xt3r5L4b said:

Don80 said:

I was once told having about £8000 available on a card(s) was good. 

By whom...??

Financial advisor - went with a family member a couple of years ago as they were sorting some things out and wanted a second pair of ears.  She said having too low available credit was bad, as was too high.  She said if you have about £8000 available, that would make you more attractive to many lenders.  I saw something similar on one of the CRA sites that suggested £5000.

I sincerely hope you’re not paying that FA for that “advice”.
Its about as meaningful as a CRA telling you what your limits should be...

dr_adidas01

Don80 said:

D3xt3r5L4b said:

Don80 said:

I was once told having about £8000 available on a card(s) was good. 

By whom...??

Financial advisor - went with a family member a couple of years ago as they were sorting some things out and wanted a second pair of ears.  She said having too low available credit was bad, as was too high.  She said if you have about £8000 available, that would make you more attractive to many lenders.  I saw something similar on one of the CRA sites that suggested £5000.

I wouldn’t pay any attention to what this financial advisor has said as it’s a load of rubbish. 

Also what the CRA’s say is simply a marketing tool as they don’t provide credit products.