Card/Loan Shuffle Advice

familyfinance20 · 19 January 2016 at 11:20AM

I would really appreciate some expert financial advice.

Priorities are;
a). To pay less interest.
b). Lower payments a little to create some disposable income.

I have 2 credit cards, 1 loan and an overdraft and would like someone to cast their expert eye over these and suggest a possible shuffle (would prefer not to apply for new credit).

1. MBNA Credit Card.
Current Balance = £6781.61
Minimum monthly payment = £73.80
Credit limit = £12100
0% p.a. until Aug 2016
Offers available with card: 0% p.a. until January 2017 3.5% handling fee for balance transfers and 4% for money transfers.
4.9% p.a. for the life of the balance and money transferred. No handling fee.

2. Barclay card
Current Balance = £4391.91
Minimum monthly payment = £96.00
Credit limit = £11800
6.9% for the life of the balance.
Offers 0% balance transfer until Aug 2016 1.9% Handling fee.

3. M&S Loan
Outstanding balance = 33 months x £192 = £6336
Monthly payments = £192
Interest rate 10.9%

4. Lloyds Overdraft
Always up to limit of £2900 every month.
Cost of this facility plus interest each month = £50.

Thanks in advance.

greensalad · 19 January 2016 at 11:28AM

I would worry less about creating disposable income and focus purely on getting those paid off.

Why are you looking for more "disposable" income paying the minimums? Shouldn't you be looking to close them?

I'd look for early repayment options for that loan, and if that's not possible focus hard on paying down the cards which are due to finish 0% soon.

Sanctioned_Parts_List · 19 January 2016 at 12:23PM

I understand the desire to have a little more headroom after all the essentials are paid, so that you don't wind up feeling like you're living a monk's life. But wouldn't you be happier if by tightening the belt slightly, you could throw off the yoke of £411.80pm debt repayments months or even years earlier?

Simple stuff: find out how much you need to live on. Just the act of listing your incomings and outgoings is often enough to see where there's excess to trim: http://www.stoozing.com/calculator/soa.php

Aside from anything else, to pay this down, you will need to live within your means, so you'll need to know what they are. As you're still using your overdraft, I'd hazard that your use of credit is still expanding. (Apologies if I'm wrong).

Then use the snowball calculator to work out the cheapest way to repay. http://www.stoozing.com/calculator/snowball-calculator.php

One thing to note, your interest rate on your overdraft is equivalent to 22.8% APR, so is by far your most expensive debt. I would be tempted to move it to one of the lower interest credit cards, then move that bank account to a basic bank account (no overdraft facility at all) and close your existing one. Even with the fee, that'll save you a lot.

Willowpop · 19 January 2016 at 3:00PM

I think I'd be tempted to move the overdraft and possibly the M&S card onto the mbna life of balance offer. There are no fees and the interest is really low. I know you have 0% offers, but unless you can pay the money off within the offer period then you'll be paying fee after fee shuffling the money around.
Hubby and I were in a similar situation to you very recently and this is what we opted for. The money is now sat on a 4.9% deal forever which is MUCH less than we were paying and every now and again if we get a 0% offer we can move a bit of money that can be cleared within the offer term. We've used the life of balance deal as a sort of holding place to park it somewhere that it doesn't accrue too much interest.
It might be a bit backwards compared to what some people opt for, but it gave us some peace of mind to know it's on a fairly low interest rate forever so long as we cover the minimum and we can chuck all the rest we have onto shorter term 0% offers.

Card/Loan Shuffle Advice

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free