Use "spare" cash to pay off loan, or reduce balance on a 0% CC?

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Hi all.

I've got some spare cash saved up, and I can't decide if I should pay off a loan or reduce the balance of a 0% card. The loan balance is just over £600, and the card has £4600 on it. The 0% deal finishes in July. The spare cash would be enough to pay off the loan, which is due to run until the end of next year at an interest rate of just under 11%. However I'm concerned that if I can't find a decent 0% deal in July I'll have to transfer it to my Barclaycard at 6.9%. Therefore would it be best to clear the CC debt off first, as the loan amount is fixed, and won't ever gather interest.

Hope that makes sense?

Comments

  • YorkshireBoy
    YorkshireBoy Posts: 31,541 Forumite
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    It's a long time since I had a loan, but I thought it was possible to get a settlement figure (say with one months interest penalty?). Maybe repost this particular question on the loans board?

    First of all, and generally, it doesn't make sense to overpay a 0% credit card.

    With the limited information available, I'd probably pay the loan off (if there was a saving) now. It'll then be off your credit report well before you need to apply for another card to take the 0% card's balance.

    Having a 6.9% APR offer 'up your sleeve' is a good fall-back (if it's permanently available to you?) should you not be able to get another 0% card.

    Don't forget to post the loan question.

    Good luck!
  • Calchas
    Calchas Posts: 405 Forumite
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    I guess, PhilMayger, before people start bashing away at their calculators, they may want to know if you face a penalty and if so how much, before giving you a definitive answer.

    If the answer is no, or yes but very little, paying off the loan would be my own particular choice.

    If I am wrong, I will learn something as well as you! :D

    I see YorkshireBoy has helped you out already.

    Flying Fingers? I only ever use one!
  • PhilMayger
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    The loan figure is the settlement figure from Egg. It costs me £35 a month at the moment, and if I pay it off now I think I worked out it will save me around £150 over the life of the loan. It would also give me an extra £35 a month to pay off on the card too I guess.
  • PhilMayger
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    Calchas wrote: »
    I guess, PhilMayger, before people start bashing away at their calculators, they may want to know if you face a penalty and if so how much, before giving you a definitive answer.

    If the answer is no, or yes but very little, paying off the loan would be my own particular choice.

    If I am wrong, I will learn something as well as you! :D

    No penalty with Egg thankfully!
  • YorkshireBoy
    YorkshireBoy Posts: 31,541 Forumite
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    PhilMayger wrote: »
    The loan figure is the settlement figure from Egg. It costs me £35 a month at the moment, and if I pay it off now I think I worked out it will save me around £150 over the life of the loan. It would also give me an extra £35 a month to pay off on the card too I guess.
    Sounds like a no-brainer to me.
  • PhilMayger
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    And yes, the 6.9% is a LOB deal for existing customers with Barclaycard, which as you said will make an excellent backup incase I can't get on a 0% deal in July.
  • PhilMayger
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    Sounds like a no-brainer to me.

    Cheers, just wanted to run it past someone else first :beer:
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