When towing a trailer with a car do I put it in 3rd gear or in overdrive?

You don't want to use overdrive when towing, as it is usually just locking the torque converter and could cause the converter to fail. The transmission would be constantly "hunting" shifting between third and overdrive which overheats the trans especially in hilly country. So either use the drive position with OD turned off, or the third gear position if that is your highest gear. The trans will be able to shift from first gear on up without the overdrive. Fuel mileage will go down a bit, but you avoid possible transmission damage. Good Luck!