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  • FIRST POST
    • chelseablue
    • By chelseablue 14th Mar 17, 5:06 PM
    • 2,286Posts
    • 2,812Thanks
    chelseablue
    Credit card debt
    • #1
    • 14th Mar 17, 5:06 PM
    Credit card debt 14th Mar 17 at 5:06 PM
    I did put this in the credit card board but think I might be better off here.

    I Currently have 3 cards:


    Barclaycard: Balance £158 Credit limit £5,000
    This is the card I have in my purse and use if necessary and pay in full if I do use it


    Lloyds: Balance £3,428 Credit limit £4,500
    0% until 2020, only got for the BT, card shredded as soon as it arrived


    Sainsbury's: Balance £1,581 Credit limit £4,800
    0% until 2020, only got for the BT, card shredded as soon as it arrived


    The £5k credit card balance worries me more than my £224,000 outstanding mortgage, not sure why maybe because credit cards are 'bad'.


    I currently overpay the mortgage by £400 a month.


    Would it be better to redirect this money to Sainsbury's? Then it'll be cleared in 4 months


    Was reluctant to do this as the cards are 0% and the mortgage isn't (I wish it was!)
    Mortgage starting balance 26.02.16 £231,294
    Mortgage after Year 1 £225,078
Page 1
  • National Debtline
    • #2
    • 14th Mar 17, 5:35 PM
    • #2
    • 14th Mar 17, 5:35 PM
    Hi

    It’s generally best to focus paying debts with the highest amount of interest first, which is the mortgage in your case. It would be good to have the credit cards cleared by 2020 though, so you don't have to try another balance transfer. You could work out how much you need to pay towards the cards to clear them before the 0% period ends, and pay anything spare as a mortgage overpayment.

    James
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • ReadingTim
    • By ReadingTim 14th Mar 17, 6:04 PM
    • 2,151 Posts
    • 3,048 Thanks
    ReadingTim
    • #3
    • 14th Mar 17, 6:04 PM
    • #3
    • 14th Mar 17, 6:04 PM
    1 - Work out how much you need to pay on each credit card so that the balance is paid off in full in the same month as the 0% deal ends. Or the month beforehand, just to be on the safe side.

    2 - Chuck the rest at the mortgage.

    Credit cards are only "bad" because they're an expensive way to borrow money, due to the interest charged. But if you're not paying any interest then they're not "bad". Just make sure you've paid them off before they start charging you interest!
    • enthusiasticsaver
    • By enthusiasticsaver 14th Mar 17, 8:04 PM
    • 4,674 Posts
    • 8,847 Thanks
    enthusiasticsaver
    • #4
    • 14th Mar 17, 8:04 PM
    • #4
    • 14th Mar 17, 8:04 PM
    I would say continue to target the mortgage but aim to have them paid off by 2020. If they are 0% and you are not overcommitted then they can be a sensible way of managing your money if you have the correct financial discipline which you do from the sound of it.
    4 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • Heather2603
    • By Heather2603 15th Mar 17, 12:42 PM
    • 71 Posts
    • 95 Thanks
    Heather2603
    • #5
    • 15th Mar 17, 12:42 PM
    • #5
    • 15th Mar 17, 12:42 PM
    By my reckoning £152.00 a month between both of those cards would have them cleared by January 2020 so you could easily do that and chuck the other £250.00 at the mortgage.
    • EssexHebridean
    • By EssexHebridean 15th Mar 17, 3:16 PM
    • 8,139 Posts
    • 42,895 Thanks
    EssexHebridean
    • #6
    • 15th Mar 17, 3:16 PM
    • #6
    • 15th Mar 17, 3:16 PM
    Yes - it comes down to the thing of "good debt -v- bad debt" doesn't it.

    I've currently got a 0% BT card on the go - took it out specifically to balance transfer a couple of large purchases to - but I have the money I'd saved for those purchases sitting aside in a savings account. I'm paying off the card currently by way of a monthly DD set up for the ORIGINAL minimum payment (in my case £28) and then random bits of "extra" cash I can earn.

    The reason for setting the DD for the set amount rather than just accepting the minimum payment option was that the min payment will drop over time - meaning you're making less impact as "standard" 12 months in, than you were when you started. Leaving it at a set level means I can budget for that amount leaving my account, and my monthly payment continues to make the same impact throughout.

    The extra money is via survey sites, cashback etc. So far since I took the card out in December I've paid off £200, near as, without taking ANYTHING from the money I have stashed in savings. There would be nothing to stop you seeing what you could do along these lines - every little helps, and you could certainly target the lower balance card to clear off in this way.

    The other approach I would take would be to go through my budget and see where I can make savings - then that money saved I'd set aside into a savings account. You get added mental security from having some money set aside should the worst happen, you also have those savings as an emergency fund, but you can maintain the OP's to the mortgage.

    Definitely get a plan in place to get both cards cleared by the end of the 0% though - never assume you will get another 0% deal unless you have absolutely no option.
    MORTGAGE FREE 30/09/2016
    Sainsbugs 0% card: 22/12/16 £1229.00/£632.77 (20/11/17)
    SOA Calculator for DFW newbies: Stoozing.com SOA Calculator
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