Can't work out which to pay off first!!

Capitaltrixie

Hi there!

Really hope you can help, I've just had a baby:T and would love (and more importantly need to be sorted financially..)

My debts are:
Barclaycard balance £2650, 0% till March 2011, currently pay £150/month (£65 min payment)

Halifax personal loan balance £3000, 7.9%, currently pay £150/month

Westcott cred sev balance £1550, 0% for the life, pay £75/month.

I'm due to receive 2k payment for misold PPI on the halifax loan above (after reading about claiming on MSE!!) and have just over 2k in my bank account - I moved home in Feb to save money for bubs & that's what I would have paid in rent.
I have a good mat package at work so my income was still £1750 net up till this month, but I'll be on SMP from Aug - Nov (124.88/week) then after Nov approx £1300 net.

With the PPI money + money in my account, I thought it best to pay off barclaycard..but as it is 0% till March maybe the halifax loan? however as my income will be reducing, I'm not sure I'll get another 0% credit card after March..arrrggghhh! also I have an interest free overdraft of £850 for 10 months, so maybe pay off what I can on both?? Would be good to have some money in my account though.....

Thanks! any advice would be greatly appreciated

jess444_2

Hi,
Welcome to MSE. Presuming you are able to manage on your mat pay without getting into more debt and you are looking at paying off your debts then the best place to start would be the Halifax loan, saving you 7.9% interest. However, some loans do not allow you to make overpayments so you would need to check that. I used the snowballing calculator on www.whatsthecost.com to help me.
Good luck,
Jess

Capitaltrixie

Thanks! yes - I plan on staying at home till it's all paid off so will be able to manage on mat pay without increasing debt. That does sound like the best idea - Halifax said I can settle in one lump sum but as far as I'm aware I'm not allowed to make overpayments...

josephine82

Hi!

Personally, I would pay off the credit card. Yes, it is 0% but as you say, you may not get another 0% credit card, and it may be better to just get rid of that once and for all.

Then you can put the £150 montly payment into a separate account and try and build up enough to pay off your loan eventually. Halifax never let me make overpayments with my loan, but I did settle it early.

To me, having no credit card and not being in your overdraft, with a loan feels like a much more stable situation, you can carry on making the payments to the loan and hopefully eventually settle it a bit early.

Might be worth ringing Halifax though to confirm if they allow overpayments.

josephine82

p.s from halifax's loans website

Can I over pay?
You can make lump sum payments towards your outstanding unsecured loan balance, but this will not change your monthly repayment amount , the interest rate or the total amount you have to repay, it just means you will repay your loan earlier.

Capitaltrixie

Thanks both, really sound advice...whichever I pay off is a positive move, but possibly there is no clear 'best option' right now, I'll check with Halifax re:overpayments in the meantime.

Also planning to ask for money for B'day/xmas & have been selling lots on ebay to generate some income to hopefully pay off more.

Capitaltrixie

Just saw your second post re:halifax, thanks!