Does this make money saving sense?

jimett

Hello, can anyone tell me if this makes sense, it does in my head.

Fixed rate on an interest only mortgage has just come to an end, interest rate was 6.??% is now 1.840% above Bank of England base rate. No endowment or savings in place as around £13,500 on credit cards with interest rates ranging from 18.12% to 30.354%. (Don't ask, foolish spending and decisions made prior to MSE website).
Have cut spending on everything and pay grocery and fuel money off credit cards and then respend on them to help cut interest costs. Not on a huge income (still get some tax credits but not much).
My idea is to use the money from reduction in mortgage payments (around £300 pm) to pay off credit cards (obviously starting with the highest interest rate first).

So is my head makin sense for once?

ViolaLass

jimett wrote: »

Have cut spending on everything and pay grocery and fuel money off credit cards and then respend on them to help cut interest costs. Not on a huge income (still get some tax credits but not much).

Do you mean that you're paying off the higher interest ones and spending on the lower interest ones thereby transferring the debt?

As long as you keep using the extra to pay off and don't get tempted to consider it extra spending money then yes, this works.

jimett

4 of my 6 CC's have balance transfer's on, so these just get payments made to them, all slightly above minimum payment. The other 3 are what i use for shopping, all are very close to credit limit, it is these that i pay some off each month and then respend.

I will carry on like this but make an extra £300 per month to the highest interest rate card, which is a balance transfer one (all special balance transfer rates have now finished).

I hadn't realised that my mortgage interest would decrease like this, so it feels like a gift from heaven that I will have some money to pay off cards as I thought I would never get to decrease the interest I am paying on them each month (around £300), including one which I have just set up a regular payment on as it was constantly overlimit and I had nothing spare to get it back under. The regular payment won't help my credit rating but has stopped the £12 pm overlimit charge. Have DD set up on almost all cards now to prevent late payment charges. (I really was in a mess, but am taking control now, feel extra boosted with my mortgage letter yesterday.....light at the end of the tunnel at last)

ViolaLass

You could try going over to the Debt Free Wannabes board where you will find lots of posters willing to share tips and advice on how to cut your spending - you say you've cut but there may be room for a little more.