Two 0% Debts - which to pay off first?

daveshoelace

Hi ya'll

I essentially have two debts. A loan which isnt accruing any interest (it was years ago and for a car and the way it worked was they put the accumulated interest on the original loan amount, was about 6%, so essentially I am not accruing interest for not paying it off in full) which is about £723, which I am paying off in £123 instalments and should be wiped out early next year.

I also have a tescos credit card which is at £1800, which is 0% till March.

So essentially not really much between them in that they need to be payed off by March and as long as they are, no interest for me. (dont want another 0% card come march, just the debt cleared).

I will have about a £800 at the end of this week extra to pay off my debt - I'm presuming the consensus would be just to clear the smaller loan first? I guess its all just a psychological thing really, but I use the tesco card for purchases because I get club card points so even if I use it on that, the amount will rise up a bit with my day to day spending.

I think I've answered my own question, but interested to hear if everyone agrees?

bottleofred

Hi Dave,

It depends whats going to cost you more in the long run. You say the car loan interest is £723 and you hope to have it cleared by March, so you need to work out how much the credit card is going to cost in interest and obviously this is dependent on how quickly you can clear it after March when the interest kicks in! If you can't clear it prior to March, have you considered transferring the balance onto another 0% card?

daveshoelace

The £723 isnt interest, its the remaining loan amount.

The more I think of it, the sillier I feel for starting the thread, given that I think I will have both paid off before any interest kicks in. I am actually gonna pay off the egg loan with the tesco card to get the club card points, then immedietly put the £800 I have this month onto the club card.

daveshoelace

daveshoelace wrote: »

The £723 isnt interest, its the remaining loan amount.

The more I think of it, the sillier I feel for starting the thread, given that I think I will have both paid off before any interest kicks in. I am actually gonna pay off the egg loan with the tesco card to get the club card points, then immedietly put the £800 I have this month onto the club card.

Oh cant actually pay it off with a credit card, so will pay the loan off first anyways. Thats nearly a quids worth of club card points im missing out on doh

bottleofred

You'll be grand then, so don't worry. However, if you can't get the Tesco card cleared before the loan kicks in, consider getting another 0% card.

Good luck