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Pay off "Cheap" Credit Card Loan now?
James_N
Posts: 1,090 Forumite
Hi all
I took a "cheap" credit card loan from M&S at 3.99 fixed for life of loan (by rolling in other monthly credit card debts I would have paid off in full) from M&S for both myself and my wife to the limits they'd allow, and used the money to pay off a lump sum from my variable rate mortgage. As of now, the mortgage variable rate is 3.95%, lower now than the card rate.
Given that I pay about £200 total to M&S for the loan - which effectively is a repayment mortage vehicle since the debt is reducing - and that my mortgage is interest only, I can lower the monthly repayment a lot by increasing the mortgage (the mortgage has a fee-free facility to do this), and the interest wil be lower and forcast to go lower still.
Or will it be silly to take myself out of a really cheap credit card loan that's guaranteed for the life of the loan AND is effectively reducing the debt to zero in about 36 months anyway.
Any thoughts on how to play this?
I took a "cheap" credit card loan from M&S at 3.99 fixed for life of loan (by rolling in other monthly credit card debts I would have paid off in full) from M&S for both myself and my wife to the limits they'd allow, and used the money to pay off a lump sum from my variable rate mortgage. As of now, the mortgage variable rate is 3.95%, lower now than the card rate.
Given that I pay about £200 total to M&S for the loan - which effectively is a repayment mortage vehicle since the debt is reducing - and that my mortgage is interest only, I can lower the monthly repayment a lot by increasing the mortgage (the mortgage has a fee-free facility to do this), and the interest wil be lower and forcast to go lower still.
Or will it be silly to take myself out of a really cheap credit card loan that's guaranteed for the life of the loan AND is effectively reducing the debt to zero in about 36 months anyway.
Any thoughts on how to play this?
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Comments
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You can still get better returns from savings accounts than 3.99% so if you aren't already doing so you could consider looking for a cash ISA. However unless you have a guaranteed rate you may see the rate fall below 3.99%.
I'd be more concerned that your mortgage is interest only. Do you have a mechanism or plan in place to pay this off. If not I'd make this your focus.
Without knowing your exact figures it's difficult to say, but supposing your credit card was 10k, a difference of 0.04% is around £4 so not life and death.0
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