Confused!!!

rkh001

I have finally managed to get Virgin to reduce their rate to 11.9% on my credit card. However, they have also offered me a loan to clear this balance at 9.9% over 3 years.

I can't decide which to go for - if I stick with the cc, then I can overpay as and when and if I am a bit short of money any month, I can pay the min. But with a loan I have to pay a fixed amount of £341.25 for 36 months.

I did the snowball and if I throw £400 each month towards this credit, I can pay off the cc or the loan by Nov 2008. That is about 6 months less than the loan term. I am not sure if they allow overpayments on the loan and also if there is an early redemption fee - I forgot to ask.

Any help/ideas will be appreciated.

lynzpower

Stick with the card is my advice. If you were not able to get 0% now cos of your rating, pay this for 6 months, then try anoother low LOBor 0%.

researcher

There are lots of companies offering loans at or below 7.9%, even if your credit rating isn't good enough for a 0% cc, it might well be good enough for one of them. You could maybe consider a 2 year loan. Companies like Tesco & Sainsbury always have all the details and repayment tables on their application forms. I've just checked Tesco website and they're offering 6.1% and there is a loan calculator tool for you to use too.

http://www.tescofinance.com/personal/finance/finance/loans/index.js

Chortle_2

I'd stick with the card myself - if you could clear it quicker with snowballing, and like you say, there is some flexibility should you desperately need it!

If you've done the snowball calcs, have you worked out what the difference in interest would be if you cleared the card by Nov 2008 compared to the loan?

Whenever banks offer a lower rate product, I always start wondering what is in it for them - they aren't likely to reduce their profits for my benefit IMHO. Although they've probably lowered the card rate to keep a customer, they're probably hoping you'll take the loan, pay more in interest over the term, and then run your card up again... (or maybe I am just super cynical :rotfl:)

Annie_Fanny

Also if you think long term as well...you pay the £400 a month to pay off the credit card - then you could pay another £400 a month (pretending it is duration of the loan) for 6 months into your high interest savings account. Voila you will have £2400 in savings!! Now that puts a big smile on my face - I don't know about you!

rkh001

The savings in interest are about £350 - not much really considering I have the flexibility. I thin I will stick with the cc. That was what I had initially thought about but then started doubting myself. Just needed reassurance from you guys.
Thanks a lot. Cc it is then. :-)