Credit card or Loan?

backtoback_2

We have been paying off our debts over the last two years and want to sort ourselves out. I have 2 options and wondered if anyone could help me decide which is the best.

We have a loan with £9,700 left @ £466 a month (til Feb 2011) and a credit card with £4,900 (0% for another 12 months).

I have to admit that we are pretty rubbish when it comes to paying off the credit card in lumps and average at about £500 a month. Then we also save £400 a month extra too.

SO the question is, should we carry on as normal leaving the CC paid off in around 10 months and the loan in 2011...total on debts/savings per month £1400

OR

Put it all into a loan, £713 (ending at the same time) a month leaving us with more disposable cash each month for savings (approx £600 minimum a month).

Does it make sense to move it to one place?

sammy115

Not really - its just consolidation. You will get no interest on your savings and you may even struggle to get a loan in the current climate.....

Take option 1

backtoback_2

Thanks, the loan would be a top up from the same company.

sammy115

You would incur more interest by adding a top up to the loan...much better to pay off the credit card and then try to overpay the loan..

pepe2008

DONT consolidate them now......you'll be paying interest on the CC balance, which is currently interest-free!

backtoback_2

True true! I guess I just have to be more strict and sensible with the CC - we dont spend on it anyways.....and in 10 months we would then only have a loan to pay off and could save to pay it all off asap.

Thanks for making me see sense!

Primula

I agree with the other posters, take option 1

mountainlioness

Assume you're only making min payments on the CC as it's 0% and saving the rest of what you can afford towards it?

I know savings rates are mingy at the mo but better in your pocket than theirs! We're sticking an amount every month into the Alliance and Leicester e-saver so when the 0% comes up we can at least cut the balance a bit before BTing if we need to.