What should I do with my PPI windfall?

retsbed

Hi MSE'ers,

Enjoying the weather?!

I would like to ask your valuable opinions on the following....

I successfully reclaimed PPI from Lloyds TSB (Thanks Martin :beer:) and paid the cheque in to my account yesterday.

The cheque is for £1,221 and I would like to use the money wisely but need a bit of guidance...

1. Pay into a pension?
At the age of 36 I have been in this country for 10 years now and have no plans to return to my country of birth. My employer does not currently offer a pension although I am aware from next year it will be a legal requirement for them to do so. I will be setting one up anyway as a matter of course in the next couple of weeks but is it a wise idea to start it off with a lumpsum?

2. Pay off some credit card debt?
I have 2 credit cards, details as follows:
RBS - balance £2,719, paying off £80pm, interest 19.16%
Barclays - balance £1,708, paying off £40pm, interest at 14%

All opinions welcome and appreciated :j

elsiepac

Hi OP

congratulations on your win, that's fantastic!

I'm sure others will say the same, but my answer to you is:

Pay the whole lot (well, maybe minus a bit of treat money for yourself!) off your RBS card - it has the highest interest. Simples

LC

glimmerofhope

Hi OP
I agree with Elsiepac, like you I have had money back for PPi and plan to use it to clear my OD and both CCs. i have been on a DMP for nearly 2 years and this will make me debtfree

Why continue to pay the banks interest on your card - you would just be giving them back the money they have repaid you.
Good luck with whatever you choose

ms_london

I would also advise to clear your RBS card, and then ask if Barclays can balance transfer the rest!

Well done on the refund, may I ask how long it took? (I recently sent them a letter, and they said it can take up to 12 weeks, so curious!).

retsbed

ms_london wrote: »

I would also advise to clear your RBS card, and then ask if Barclays can balance transfer the rest!

Well done on the refund, may I ask how long it took? (I recently sent them a letter, and they said it can take up to 12 weeks, so curious!).

Thanks ms_london, I closed my Barclaycard earlier this year as they wanted to hike the interest rate to 29% so now I just pay off at the old rate and am unable to do a BT to it unfortunately.

The refund took approximately 11 weeks and Lloyds continually kept in touch via snail mail about the progress of my claim.

retsbed

elsiepac wrote: »

Hi OP

congratulations on your win, that's fantastic!

I'm sure others will say the same, but my answer to you is:

Pay the whole lot (well, maybe minus a bit of treat money for yourself!) off your RBS card - it has the highest interest. Simples

LC

Thanks for the advice elsiepac, much appreciated.RBS have just hiked my interest rate up this month so it does make sense what you're saying.

retsbed

glimmerofhope wrote: »

Hi OP
I agree with Elsiepac, like you I have had money back for PPi and plan to use it to clear my OD and both CCs. i have been on a DMP for nearly 2 years and this will make me debtfree

Why continue to pay the banks interest on your card - you would just be giving them back the money they have repaid you.
Good luck with whatever you choose

Congratulations on your debt freeness glimmerofhope, you must be really happy!

Pinksparkles26

Def clear the card with the highest interest rate. Once you've cleared the debts and have spare money then worry about paying into a pension but get them down to £0 first.

silkglade

I agree with the others, paying that much off will help the rest of it seem more manageable and will cut down the minimum payments too, then maybe you can still pay them off at the same rate (just it will go further)

Well done and good luck