Pay Off Overdraft or Credit Card First UK?
If you've got both an overdraft and credit cards, you've probably wondered:
"Which should I pay off first — the overdraft or the card?"
The honest answer: it depends.
Not a cop-out — the best choice genuinely changes based on:
Your overdraft EAR and how close you are to the limit
Your card APR(s) and any promo deals
Fees, charges, and daily stress levels
This guide walks through how to think about it, with two scenarios showing when each priority makes sense.
This is information only, not regulated advice. If you're behind on essentials, speak to a free UK debt charity first.
APR vs EAR: The Simple Version
APR (Annual Percentage Rate) — Used for credit cards and loans. Tells you the yearly cost of borrowing.
EAR (Equivalent Annual Rate) — Used for UK overdrafts. Also a yearly rate, but accounts for compounding and the fact you can dip in and out.
In practice: A 39.9% EAR overdraft costs roughly the same as a 39.9% APR card. Sometimes more, once fees and limit issues are factored in.
DebtRiot treats them separately, so you can enter overdrafts as EAR and cards as APR and compare fairly.
It's Not Just About the Rate
Headlines like "39.9% EAR" or "29.9% APR" matter, but with overdrafts you also need to ask:
How close am I to the limit?
£50 headroom? That's a crisis waiting to happen.
£1,000 headroom? Less urgent.
What happens if I go over?
Daily fees? Declined payments? Credit score damage?
Or is it just embarrassing but manageable?
An overdraft that's:
Very expensive AND
Constantly at the limit AND
Triggering fees
...is usually more urgent than a similar-rate credit card with headroom.
On the other hand, a small overdraft well inside its limit might be less urgent than a huge card about to lose a 0% deal.
Scenario A: Overdraft First Is the Obvious Move
Situation:
Overdraft: £1,200 at 39.9% EAR, limit £1,250
Credit card: £3,000 at 19.9% APR, minimum £75
Debt budget: £350/month
Why overdraft first:
The overdraft is:
Almost maxed out (£50 headroom)
Very expensive (39.9%)
Causing daily stress and potential fees
The card:
Has plenty of room
Lower rate
Manageable minimum
Sensible approach:
Pay card minimum (£75)
Throw everything else (£275) at the overdraft
Clear the overdraft in ~5 months
Roll that £275 onto the card
In DebtRiot:
Enter overdraft with EAR selected
Use Avalanche (overdraft is highest rate) or Custom order to put it first
Watch the limit pressure disappear quickly
Scenario B: Credit Card Needs Attention First
Situation:
Overdraft: £400 at 39.9% EAR, limit £1,500 (plenty of room)
Card: £4,200 on 0% promo for 6 months, then 29.9% APR
Debt budget: £450/month
Why card first:
The overdraft is:
Small relative to limit
Not causing immediate stress
Still expensive, but not urgent
The card is:
Large balance (£4,200)
About to become very expensive (29.9%)
A ticking time bomb
Sensible approach:
Keep overdraft stable (don't let it creep up)
Focus most extra on the card while it's still 0%
Get that balance as low as possible before 29.9% kicks in
Then clear the overdraft
In DebtRiot:
Enter the card with Promo Rate: 0%, Promo Months: 6, and Standard APR: 29.9%
Use Custom order to prioritise the card, or enable "Prioritise ending promos"
Watch how the plan attacks the card before the promo expires
Questions to Ask Yourself
Instead of following a rule, ask:
1. Is my overdraft near the limit with fees?
Yes → Probably urgent, regardless of card rates
No → Maybe less urgent than high-rate cards
2. Do I have a 0% promo about to end?
Yes, with a big balance → Time bomb, needs attention
No, or small balance → Lower priority
3. What's causing more stress?
Daily overdraft anxiety? → Fix that first
Looming promo deadline? → Focus there
4. Could switching accounts reduce overdraft pain?
Sometimes a lower-EAR bank account beats any perfect payoff order
How to Test Both Orders in DebtRiot
Go to the DebtRiot calculator
Add your overdraft with EAR selected
Add your credit card(s) with APR and any promo details
Compare strategies:
Avalanche — usually puts overdraft first if it's highest rate
Custom Order — manually put the card first to see the difference
Cash Flow Index — might prioritise based on minimum payments
Look at:
Debt-free dates
Total interest
How the first 6-12 months feel
Pick the order that balances maths with your mental health
Compare overdraft-first vs card-first →
When to Get Outside Help
If you:
Are consistently over your overdraft limit
Can't cover minimums on everything
Are using new borrowing to cover old debts
...a payoff order isn't the core problem. Speak to a free, regulated debt charity:
They can help with breathing space, reduced payment plans, or other solutions. You can use DebtRiot later, once the immediate crisis is handled.
Key Takeaways
Rate isn't everything — overdraft limit pressure and promo end dates matter too
Overdraft at the limit with fees is usually urgent, regardless of card rates
0% promo with a big balance needs attention before it becomes 29.9%
Test both orders in the calculator — the "obvious" choice isn't always right
DebtRiot handles APR and EAR correctly — unlike most US-built calculators
