Overdraft vs loan and credit card

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Nomsv

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I have a loan that charges 26% interest ,A credit card charging 17% interest .
I was offered an overdraft of 10% interest and the amount can cover both my debts mentioned above.is it advisable to take the overdraft and pay off my credit card and loan and remain with one debt ? I can also pay more on the overdraft repayment .

What is the best solution ?

Kindly mention the disadvantages of having an overdraft that is over R50K.is it ok if your salary does not cover the amount used on the overdraft but can afford to pay back on a monthly basis?

Thanking you in advance.
 
Move everything to the facility with the lowest interest and then pay it off asap./
 
There is no repayment amount on an overdraft. The amount you go into debt is your balance and interest is charged on this negative balance. It's not like a credit card or loan where you have a minimum monthly repayment amount. All the bank want to see is movement in the account.
 
Nomsv said:
I have a loan that charges 26% interest ,A credit card charging 17% interest .
I was offered an overdraft of 10% interest and the amount can cover both my debts mentioned above.is it advisable to take the overdraft and pay off my credit card and loan and remain with one debt ? I can also pay more on the overdraft repayment .

What is the best solution ?

Kindly mention the disadvantages of having an overdraft that is over R50K.is it ok if your salary does not cover the amount used on the overdraft but can afford to pay back on a monthly basis?

Thanking you in advance.
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Moving everything to the overdraft will save you money if you don't make more debt on your credit card or take out another loan now that they are "paid off".
 
visrot said:
There is no repayment amount on an overdraft. The amount you go into debt is your balance and interest is charged on this negative balance. It's not like a credit card or loan where you have a minimum monthly repayment amount. All the bank want to see is movement in the account.
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So this could be extremely effective or extremly dangerous depending on your financial habits.
 
F1 Fan said:
So this could be extremely effective or extremly dangerous depending on your financial habits.
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Extremely? Not necessarily, you do have a limit. Mine for example is R15000, but I never get to R10000. It's damn convenient.
Credit card I only use for 2 things and nothing else (settle immediately via cheque account btw )

1. Online purchase
2. Car hire
 
visrot said:
Extremely? Not necessarily, you do have a limit. Mine for example is R15000, but I never get to R10000. It's damn convenient.
Credit card I only use for 2 things and nothing else (settle immediately via cheque account btw )

1. Online purchase
2. Car hire
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My limit is R100 000 and I want to use it up to pay all my debts with high interest.im scared.
 
Just make a rule that each 5/10k you pay off you limit down your overdraft to match it.
 
The danger with overdraft is that it's often linked to the primary or only account of the person resulting in a permanent negative balance that eats away at your soul over time.

A separate account is often more manageable and easier to pay off in the long-term, which might offset the higher interest.

At least that's been my personal experience with overdrafts.


Also credit cards often have long interest free periods if it's just a cash flow factor.
 
Great ,that's what Im intending to do.will pay and reduce my overdraft on a monthly basis with the instalment that would have been for the credit card and the loan .my only worry was the negative amount showing on my check account ,will it affect me ?
 
Nomsv said:
Great ,that's what Im intending to do.will pay and reduce my overdraft on a monthly basis with the instalment that would have been for the credit card and the loan .my only worry was the negative amount showing on my check account ,will it affect me ?
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You will not be worse off. Anyway, banks love the fact that you have an overdraft. Just make it move the whole time
 
Move to the overdraft. Consolidating all of your debt to a single account every month with lower interest payable is the logical choice.
 
hambone said:
On an amount like that i am sure the overdraft fee is negligible to the interest you're paying on the loan/credit.
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The monthly fee is R30 and the interest is 10%.not too bad compare to the CC and the loan WITH TH 26%
 
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