Overdraft vs Credit Card

Devo

Right... I've sorted out my finances as far as realising I need to take hold of my situation before it gets worse. Now, I have £3800 on my Egg card (0% for 5 months) and an £1800 interest free overdraft with Barclays. I have a graduate account with Barclays (pay £5 a month for the benefits of breakdown cover, mobile phone insurance etc etc) and they have not said anything about reducing my overdraft etc, but I'm worried in case one day they suddenly ask me to pay it back. I have budgeted to spend around £250 a month on my debts and don't know if I should just pay off one of them or split the payments between the two

Thanks in advance...

fatboyonadiet

What's the interest rate on your overdraft? Why don't you ring them and ask and find out when they will take it back, is it not 2-3 years after you graduate?

Pay off the one with higher interest first, if they're 0% put it in a savings account for the mo.

Devo

fatboyonadiet wrote:

What's the interest rate on your overdraft? Why don't you ring them and ask and find out when they will take it back, is it not 2-3 years after you graduate?

Pay off the one with higher interest first, if they're 0% put it in a savings account for the mo.

The overdraft and credit card are both at 0% currently... is it really worth putting that money in my ISA for 5 months? I don't want to contact the bank about my overdraft in case they say "Oh yeah, pay it back" etc :eek:

fatboyonadiet

Stick it in an ISA then, not sure which is the best try checking www.moneysupermarket.com for the current best payer. When did you graduate? It it was less then 2 years ago wouldn't worry too much, they should get in touch with you anyway, maybe try asking on the student board.

grumbler

Devo wrote:

... is it really worth putting that money in my ISA for 5 months?

It is worth using ISA only if you are a taxpayer. Otherwise you can use any saving account with about 5% interest rate and fill-in some form to get interest in full without 20% tax being deducted.

I see that you cannot repay your Egg card in 5 months. It is worth trying to get some other 0% card to transfer the rest of the balance in 5 months.

Devo

fatboyonadiet wrote:

Stick it in an ISA then, not sure which is the best try checking www.moneysupermarket.com for the current best payer. When did you graduate? It it was less then 2 years ago wouldn't worry too much, they should get in touch with you anyway, maybe try asking on the student board.

I have an old ISA with Smile which I have not used for a while, not sure what the rate is though... think I'll just use that. Am I right in thinking then I should just pay the minimum on my Egg card until then and whack all the rest in the ISA

Devo

grumbler wrote:

It is worth using ISA only if you are a taxpayer. Otherwise you can use any saving account with about 5% interest rate and fill-in some form to get interest in full without 20% tax being deducted.

I see that you cannot repay your Egg card in 5 months. It is worth trying to get some other 0% card to transfer the rest of the balance in 5 months.

Well... I have my Barclaycard (which is completely empty) so I'm hoping that Barclaycard will be doing some sort of offer in 5 months time on balance transfers for existing customers My credit rating is good as far as I'm aware, but I'll apply for another card nearer the time

fatboyonadiet

Leave it about 6 weeks before it runs out to apply, should give you plenty of time, you could ring Barclaycard too as you've suggested. Pay the minimum and stick the rest in the ISA.

Devo

With my ISA though am I right in assuming it should be tax free? Therefore, how do I go about paying money into it before tax - if that makes sense

fatboyonadiet

You can basically pay in upto £3k per tax year and you won't be charged tax on the interest earned, does that make sense? Not 100% sure what you're asking!!!

Devo

fatboyonadiet wrote:

You can basically pay in upto £3k per tax year and you won't be charged tax on the interest earned, does that make sense? Not 100% sure what you're asking!!!

Sorry. My mistake. I thought you paid into an ISA kind of like a pension e.g. before you had paid tax on the money