Dealing with debts, order of repayments??

billymadbiker

Hi,
I have had a bit of a bad run and have ended up owing a fair bit on credit cards and, worse, to the tax man! Hmrc are after it soon as so it will have to go on a credit card somehow, whats the best way to juggle it about?

I am just looking for some advice on the best (or cheapest!) way to repay the following:

Tax (over)Due on 31st Jan £4400.
Tax Due from an investigation £4200

My credit cards:
hsbc, Debt £465, available credit £1000
hsbc gold, Debt £145, available credit £2100
Barclaycard, Debt £5950, available credit £2150

MBNA, This is £300 in credit(!) with a limit of £7900.

I have £3000 in the bank available this month plus a £1000 o/d if needed.
A few things to take into account are,
If the £4400 is not paid by the end of this month it will attract a surcharge of 5% - £222.
Hmrc charge 1.25% extra for credit card payments.
I have just taken out the barclay card and the £5950 on that has been transfered from the mbna card so is at 0% for another 13mths.
MBNA have just offered me a 0% for 6mths rate on bt's.

They want the £4200 asap. It would also be cheaper to pay the 1.25% to put the £4400 on a c/c than pay the 5% surcharge.
So, my initial thinking is,
Pay £3k from the bank toward my Jan payment. Pay the rest (£1400) using the mbna card which would cost £1417.50 and leave the mbna with a £1117.50 debt.
Transfer this to the barclaycard (costing £33.53 but giving it 12mths @ 0%)
Pay the £4200 using £2100 each (or £2126.25 after fee) from both the hsbc gold and the barclaycard.
The b/c is 3mths 0% for purchases.
Transfer both the hsbc debts to the mbna (3%fee) for 6mths at 0% and possibally the other £2126.25 back from the b/c if I don't think I will get it paid off within 3mths time.

Sorry if this looks a bit confusing but just wanted to run it by someone to see if I am on the right track or if there is a better way?
Thanks!

beanielou

Can you afford to repay the credit cards though?

billymadbiker

Have been getting about £1000 p/m at them so, in a year and a half or so, yes.

First thought was to just get a bank loan for the lot but with b/c at 0% and the offer of 6mths at 0% on the mbna would be cheaper to put it on the cards at only 3% fee
Yes?

Clarie_2

Not quite sure I'm following, too early in morning!

Could you list it for me like Martin's credit card shuffle table?

Debt, remaining credit, apr(how long for and when it shifts)

In a 'now' scenario and your 'paid tax' scenario?

Thanks!

billymadbiker

Sure, only problem is, I can't find the
credit card shuffle' table!!
Will have a go at something..

billymadbiker

Ok, Things as they stand at the moment:

HSBC CC, -£465.06, Available +£1034.94 (APR 14.9%)
HSBC G CC, -145.32, Available +£2154.68 (APR 14.2%)
MBNA CC, +£304.88, Available +£8204.88 (APR 0% on BT for 6mth)
Barclaycard, -£5948.20, Available +£2151.80 (APR 0% on BT for 6mth, 0% on purchases for 3mth)

I own hmrc £4436.36 as of the 31st Jan. If not paid by end of Feb it attracts a 5% surcharge but the intrest otherwise is really low.

I also owe hmrc £4200. This is only attracting a low rate of intrest but they want the rest repaid as soon as..

I have £3000 in the bank today to go toward this. If I use it to pay hmrc I can use my debit card so no extra charge. They will charge 1.25% for credit card payments though.

I also have a £1000 overdraft available on my bank account but not sure what the apr would be on it?

I will draw out a table showing what I was thinking of doing..

jonjamie1970

Forgive me for being thick, but wouldnt the first thing to do be to pay of the HSBC cards of 465 and 145 with the MBNA card, why would you be paying interest on those two when you could clear most of it with the £304 credit and the remaining on 0% ???

I would then pay the HMRC with the MBNA before getting a surcharge and then work to clear whatever you could from your salary and savings to reduce the MBNA and Barclaycard before the 6 month interest free period ends.

EDIT: Just seen a surcharge for paying HMRC by credit card, pay the £k you have available and pay the rest on the 0% MBNA attracting a lower overall surcharge on £1400

billymadbiker

Ok,
Presuming the following:
I pay £3k (from bank) off my jan tax bill. This leaves £1436.36.
Now, I am not sure if it best to pay the remainder off with cc or not.
If I don't It will cost me £72 in fines as I will miss the Feb deadline but then I will owe £1508.18 which will be on the hmrc low intrest rate.
If I do pay it on card it will cost me £17.95 in card fees plus £43.63 to then b/t it to a 0% card. Total of £1480 providing I pay it off the cc within 6mths.

If I pay it I would put it on the Hsbc G card then b/t to the mbna.

For the £4200 I would have to make 2 payments, again using the Hsbc card, b/ting them both to the mbna as well. Cost for moving £127.75,
I will get charged intrest at 14.2% while the balances are being transfered but hopefully this should only be for a few days per payment.

I would then get left with a £5870.75 debt on the mbna. (minus the £300 that this is currently in credit by) Basically costing me £245 to shift the debt from hmrc to cc.
I am trying to work out if there is a cheeper way of doing it?

The table below shows me making 1 payment to hmrc per week, starting today. Thats if the b/t's can go across within the week. Also does not account for any intrest I may get charged whilst it's sitting on the hsbc card.

I have £1k p/m available for repayments (including the min's on both cards).

I have only drawn the table up till the end of the 0% on the mbna card as I am not sure how to work out what it's going to cost me from then on in (or I will see if I can b/t to another 0% card)

billymadbiker

Only Reason I did not clear the hsbc cards was,
I only just got the barclay card, The balance on that has just been transfered from the hsbc card.
The other card is only in credit as I somehow managed to pay cash onto the wrong card. It was intended to go toward the hsbc debt.
I just planned to pay both the hsbc's off this mth so left the balances there rather than pay 3% to shift them.
Then got the £4200 bill!
As it is, I will shift them over to the bc and have them on 0% for 12mth.

I have doen a table in excel but how do I get it to display properly on here?

jonjamie1970

billymadbiker wrote: »

Only Reason I did not clear the hsbc cards was,
I only just got the barclay card, The balance on that has just been transfered from the hsbc card.
The other card is only in credit as I somehow managed to pay cash onto the wrong card. It was intended to go toward the hsbc debt.
I just planned to pay both the hsbc's off this mth so left the balances there rather than pay 3% to shift them.
Then got the £4200 bill!
As it is, I will shift them over to the bc and have them on 0% for 12mth.

I have doen a table in excel but how do I get it to display properly on here?

I think you have to link it somehow but not sure which sites can host spreadhseets.

I think the first move as you say is to get the HSBC's switched or paid off and then close those accounts. All you have to worry about then is the cheapest option to pay HMRC (can you not get a plan with them by the way ? Defer ?) and then work to clearing those credits cards before the 6months is up, or schmooz to another 0% card.

Clarie_2

Ok, typing as I think, so it might not make much sense.

Option 1: will HMRC do a debt repayment plan for you / waive surcharge if you pay part of the debt. etc? Might be worth a phonecall and asking, you never know.

Option 2: If you pay your 3000 to HMRC. Claim back your 304.88 overspend on MBNA and pay that too. That will cost you a £56 surchage, and leave you 1131.48 with HMRC. (what interest rate?)

Option 3)Check your interest rate on overdraft. It might be cheaper to use your 1000 to pay HMRC and avoid the surcharge, depending on your account and fees etc. Even if it's Halifax, if you can use it right on the last days to pay HMRC, and then your wage goes in and brings you out a day or so later it may only be a few pounds. But do check! and this assumes you can use all your 1000 from March to bring you out or overdraft, rather than pay off credit cards. Obviously, if it's a 0% then it's much better to have your debt there anyway.

Option 4)If you can't use your overdraft or reclaim your 304.88, then it looks like your cheapest option is to pay it on credit card at £61.58. This is only a saving of £10 - if you save more than that having the money owing to HMRC at low interest rates maybe it won't matter?

In March then, use your 1000 to pay back overdraft/ pay off HSBC depending on interest rates.

Now you are down to an interest rate paying game with the barclaycard and the 4200. You say it's a low rate of interest, and they want it 'as soon as'. What is the interest rate? Are there fees or fines for not paying it in the next couple of months?

Maybe they would accept your (1000 minus minimum repayments to barclaycard) each month. It would take you roughly 5 or 6 months then to pay off the 1131.48 + 4200. At which point you need to then pay off your barclaycard/ transfer it.

If not, and you have to repay it urgently then your plan to put it on credit cards then repay those would work.

Clarie