Credit card V overdraft

Jemw83

I have a credit card debt of £4200 and a bank account overdraft of £500.

My credit card is frozen and the interest is zero.

Am I better off paying £100 per month off my credit card or £300 and use my overdraft?

I am looking to paying off my credit card as soon as possible.

eskbanker

When you say "a bank account overdraft of £500", do you mean an overdraft facility of £500, i.e. do you owe the bank £500 yet?

Assuming the overdraft charges interest, then while the credit card doesn't, then it makes no sense to use the overdraft facility, so keeping out of it and putting all surplus money to the credit card will make most sense financially....

Jemw83

Yes an overdraft facility 
many thanks for your reply 

MorningcoffeeIV

Your overdraft can be withdrawn at anytime. 

Pay off your credit card with your own money.

spinningsheep

Pay off the card, don't use the overdraft. Your overdraft is likely in the region of 40% APR, it would no sense at all. You are paying zero interest on the CC balance, pay it off ASAP but not if that means incurring interest elsewhere. 

enthusiasticsaver

Don't use the overdraft.  It is the most expensive way of borrowing.  Just pay as much as you can afford monthly from your salary to the credit card.  You are only repaying just over 2% of the credit card balance monthly if the total owed is £4200 and you are only paying £100.  Can you not increase that? 

DullGreyGuy

enthusiasticsaver said:

Don't use the overdraft.  It is the most expensive way of borrowing.  

An over simplification, its often an expensive way of borrowing but sub-prime credit cards can have some crazy interest whereas number of mass-affluent accounts like Barclays Premier give interest free overdrafts up to X (Barclays is £500)

CliveOfIndia

I agree with the previous posts.  Assuming your overdraft will charge interest and your credit card doesn't, then from a purely monetary point of view it would be better to pay off the card from your regular income, and not use the overdraft.

Aside from the interest you'd presumably be charged on an overdraft, it's also worth bearing in mind that regular use of an overdraft is generally viewed as a negative by any prospective lenders.  This may or may not be an issue for you, depending on whether you're likely to need to apply for any further credit at some point in the future, but it's just something to bear in mind.

born_again

DullGreyGuy said:

enthusiasticsaver said:

Don't use the overdraft.  It is the most expensive way of borrowing.  

An over simplification, its often an expensive way of borrowing but sub-prime credit cards can have some crazy interest whereas number of mass-affluent accounts like Barclays Premier give interest free overdrafts up to X (Barclays is £500)

From OP >>My credit card is frozen and the interest is zero.<<

So it is simply going to cost money to use O/D as there is no interest charged on CC.

enthusiasticsaver

DullGreyGuy said:

enthusiasticsaver said:

Don't use the overdraft.  It is the most expensive way of borrowing.  

An over simplification, its often an expensive way of borrowing but sub-prime credit cards can have some crazy interest whereas number of mass-affluent accounts like Barclays Premier give interest free overdrafts up to X (Barclays is £500)

In this case though the credit card is 0% and the question was should the OP borrow on overdraft to repay it.  Even if it is a interest free overdraft facility they can be withdrawn at any time so it is not advisable to use it for anything other than very short term borrowing and then only as a last resort.