Credit card or redundancy money??

skinny_jeans · 16 August 2017 at 12:56PM

I was recently paid off from my job and after booking a holiday etc I have some money left. My question is, I am off to Edinburgh tomorrow for a long weekend and as I have no wages left this month for spending money, I was going to put all spends on my credit card. My boyfriend and myself will then pay it off as quickly as possible. Would I be better to use the money I have there rather than my credit card? We are currently thinking about trying to buy a house in the next year or so, however my credit rating is currently very low. I was in a dmp which finished last year, am currently in my overdraft and have 3 credit cards. The redundancy money I have left would be going towards a deposit so I don't really like to spend it, however I think maybe it would be better on this occasion than creating more credit card debt for myself?

Any advice would be greatly appreciated.

eskbanker · 16 August 2017 at 1:12PM

If you have ambitions towards property ownership in the near future but have a poor credit rating and debts then you may have already missed an opportunity to improve your finances in the eyes of prospective lenders if you immediately committed to a holiday, etc, with your lump sum.

Getting out of your overdraft should certainly be a priority but how much debt do you have in this and on credit cards, and at what rates, and how much redundancy money do you have left?

skinny_jeans · 16 August 2017 at 1:17PM

Hi - I currently have an overdraft of £850.00, 1 credit card with £800.00 and one with £300.00. I also have one with an available balance of £650.00 but I have not used it.

I have £3000.00 redundancy money left

eskbanker · 16 August 2017 at 1:26PM

In your shoes I'd pay off your debts and try to make the remaining £1K last as long as possible. It's good to use credit cards to demonstrate ability to manage credit but only if you pay them off in full every month, and once you have a history of doing this then mortgages start to become more achievable.

What are your employment prospects like, i.e. how likely is it that you'll be able to get back into work quickly to avoid falling into debt again (never mind getting a mortgage)?

skinny_jeans · 16 August 2017 at 1:29PM

I already am employed again - I was lucky enough to start a new job 3 days after I finished in my previous one.

Ebe_Scrooge · 16 August 2017 at 1:31PM

So you recently finished a DMP, you owe money on credit cards and an overdraft, you want to buy a house in the near future, and you were made redundant. Yes, splashing out on a holiday would seem to be the most sensible thing to do :eek:

Have you got another job now ?

All that aside, spending on the credit cards and paying off IN FULL as soon as the statement arrives will go some way to help your credit rating - but it's not a quick fix, and you need to be doing this regularly for a year or so to make any real difference.

skinny_jeans · 16 August 2017 at 1:35PM

The holiday is for my sisters wedding actually. I came to ask for advice on what I should do now, not to be judged on decisions that have already been made.

Yes I do have another job now,

Thanks

Credit card or redundancy money??

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