M&S Credit Card

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I have a debt of 2.5K on a M&S card at LOB 3.9%, with about 6k available to spend.

I was thinking of buying £1000+ of currency at M&S with the credit card and then changing it back at various banks & travel agents for cash, so that I can reduce my bank overdraft. I know that I would incurr some exchange rate costs, but my question is how would it affect my M&S repayments?

I'm aware that the interest rate is 15.9% for this sort of transaction, but would the repayments go towards the cheapest debt first (3.9% LOB) or the most expensive (15.9%)?

My bank overdraft charges are more than 15.9%, so it sounds like a good idea to me.

Any advice would be welcome.

Comments

  • tryingtobegood
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    I think there should be information on your credit card statement telling you which debt gets paid off first. For instanse on the back of my Barclaycard statement there is an Allocation of payment section and cash withdrawals are the 5th in line to be paid....obviously because this is incurring a higher interest rate!
    Check your statement before buying currency as cash withdrawals may have the same interest charge and then you won't incurr any exchange losses. HTH
    Must learn not to count chickens before they are hatched!!!!:D

    Every day is a new challenge not a new problem!:p

    SW start 08/01/14 4/21lbs (1st target) :j
  • YorkshireBoy
    YorkshireBoy Posts: 31,541 Forumite
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    Stoneman wrote: »
    I was thinking of buying £1000+ of currency at M&S with the credit card and then changing it back at various banks & travel agents for cash...
    Don't!

    If you do anything, buy Sterling travellers cheques. There's a 1% handling fee, which will be far cheaper than any buy/sell spread.

    The cheques are treated as a purchase...only if bought from M&S with an M&S credit card (as I'm sure you're aware).
    my question is how would it affect my M&S repayments?
    At the moment your payments go towards the lowest interest rate balance first, but that will change very early next year when new legislation means lenders have to apply them towards the higher interest balance first.
  • Stoneman_2
    Stoneman_2 Posts: 124 Forumite
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    I think there should be information on your credit card statement telling you which debt gets paid off first. For instanse on the back of my Barclaycard statement there is an Allocation of payment section and cash withdrawals are the 5th in line to be paid....obviously because this is incurring a higher interest rate!
    Check your statement before buying currency as cash withdrawals may have the same interest charge and then you won't incurr any exchange losses. HTH


    I did read the back of my statement, but wasn't sure.

    The order they use is:
    1. Interest, insurance premiums, fees and charges
    2. Balance transfers
    3. Purchases
    4. Cash advances

    so my cheaper debt would be paid first :(
  • Stoneman_2
    Stoneman_2 Posts: 124 Forumite
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    Don't!

    If you do anything, buy Sterling travellers cheques. There's a 1% handling fee, which will be far cheaper than any buy/sell spread.

    The cheques are treated as a purchase...only if bought from M&S with an M&S credit card (as I'm sure you're aware).At the moment your payments go towards the lowest interest rate balance first, but that will change very early next year when new legislation means lenders have to apply them towards the higher interest balance first.

    If the change is due to take place early next year, then I might wait until then.

    I'm currently paying about £40 per month on a OD of £2.5k and I think the M&S option would be about £35.....so maybe not worth it!!

    I haven't used Sterling Traveller cheques for years. Are they just as easy to exchange at banks and travel agents?
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