Pay off loan or cc???

Lydia.42

Hi

My OH received his back-pay this morning - £5300. :j
We have already discussed that this will be used to make a huge dent in the debt we owe. Although he's had to wait over 18 months for this money,I'm soooo glad it's worked this way, as otherwise we would have wasted it all previously. :mad: (Lesson well and truly learned!!)

So enough rambling. My query is, do we use the money to clear his loan or his cc?

By shuffling money on our cc's, we could free up enough to add to this £5300 and clear the outstanding £8500 on his loan (leaving everything we owe on cc's, and freeing up nealry £260 per month - which is the loan re-payment).

Or do we concentrate on clearing all our cc's first and the loan last? The loan is not one that you can over pay on, so it would have to be settled in full if we wanted to close account early.

Please advise............my head hurts. With all our cc's we have been tackling the highest interest first, and shuffling. Loans completely confuse me.

Thanks loads

L

ms_london

It depends on the APR of the loan & the credit card. I would suggest clearing the CC's though as loans arent as felxible with over payments & sometimes you have to pay early penalty fee's. Perhaps look into this &/or post your APR's and we can best advice.

Just make sure that you cut up the CC's once they have cleared though :0)

Glad someone is having a good day.

xx

D&DD

Hi Lydia firstly WOOHOOOOOOOOOO great news !!!!!!!!!!
What are the aprs on the loan and cards ? I would chunk it off the one with the highest APR thus saving you the most interest? BUT hang around some of the others will roll up shortly with their advice

CLAPTON

you need to post
for each credit cards, the amount on the card and APR
for the loan post monthly payment and number of months left to pay and also how much you need to clear the debt (you will need to ask the loan company ...and get it in writing)

lynzpower

Check your loan doesnt have early redemption fees. What you could do is throw it at the CC's ( people reckon this 0% bubble will burst one day) then up your payments to the loan to clear it quicker if theres redemption fees.

Saying that I think Id prefer to have a loan outstanding than a CC, not sure why, just feels a bit more manageable to me.

Lydia.42

Hi Lydia firstly WOOHOOOOOOOOOO great news !!!!!!!!!!

Thanks - about time we had some luck. What with roof repairs, new tyres, etc, etc............ As i said though, very lucky that we got this now. Really would have wasted it all a few months back!!!! :mad:

Well, i have tried to put info together (didn't realise how much work went into this, hence why i have yet to post our proper SOA :rolleyes: ). Apologies for rambling........

Barclays CC (6000 at 6.9% life of balance) balance £4736
MBNA CC (6000 at 5.9% until June06, then 17%) balance £5750
Halifax CC (5500 at 6.9% life of balance) balance £4860
A & L CC (6000 at 0% until Sept06, then 17%) £0
Egg CC (1500 at 15.9%) balance £0
Abbey O/D (900 at 9.9%) balance £0
A & L O/D (900 at 7.9%) balance £900
NatWest O/D (100 at 0%) balance £95
Barclays O/D (1000 at 9.9%) balance £425
Barclays Loan (10.9%) balance £8600

:eek:

A & L card actually has about £1000 on (I am helping a friend that cannot get other cards – this will be gone in the next 2 weeks when she can transfer back to her Barclaycard at lower rate) My 0% promotion ended this month so I emptied the card, but they have just extended for another 6 months – yippee!!!! :j Only found out when I transferred friends debt on last week, was going to close this one!!! :rotfl:

Basically we pay the minimum on all debts and put extra onto the ones with highest interest. This month was going to be the Barclays overdraft that went. But we were thinking of using the Egg card to super-transfer money to current account to add to the £5300 back pay. Then clearing Egg card with A & L card, and repeating to get the £8600 together to clear loan completely.

We pay £259 per month to the loan, so clearing this would free up extra to chuck at the cards. (The £8600 is the settlement figure. The loan is my OH’s but I think it ends July 2009, so still has quite some time to run on it).
Once the loan was gone, we would then fill up my A & L card as much as possible to take advantage of the 0% promotion.

I know what you mean Lynz about the 0% thing. I don't think we could get any new cards (got declined recently), so we are going to try and work with what we have got. Not too bad as a large amount of it is life of balance. And yep, have learnt from bitter experience not to keep spending on cc's. :mad: We have not used one (all cut up) since Dec05.

Hope this makes sense. Now you can see why I have been so confused!!!!

My head hurts!!!

ms_london

Use it all to get rid of the MBNA CC - if the APR shoots up to 17% in June - I would definately do this!!

xx

JAMIEDODGER

just wanted to say thats fantastic news!!!!

CLAPTON

the barclay loan doesnot seem to have any early repayment penalties so you are in the happy position to make the following choices.

if you think you can continue to play the 0% rate game them probably best to get rid of the loan.....but if you do make sure all the monthly saving are put back to reducing debts

or if the likelihood of playing the 0% cc game doesnot seem that good and you will end up paying 17% on the CC, then best to attack the highest APR cards .

just my view of course