Credit Card Worry

seven-day-weekend

CFC wrote:

You are being sensible. £3800 is a lot of money, unless you're taking home £3800 a month!

But there's no need to actually worry (as in sleepless nights and panic attacks) because you're going to take control of it.

0% finance for borrowings that you need (like new kitchen) is actually a pretty good deal. Now, that will last for 6 months. So in 5 months time, make a note on your calendar to look for another card which will give you 0% for 6 months, open an account, and transfer the balance from your current card to your new card. This will allow you to have interest free credit on your debt for a year.

Now look at how much you can pay back in a month. There are more sophisticated ways, but let's stick with the normal basic method. You want to have this paid off in 12 months so you can be rid of it, I presume? So can you afford to pay off £316 a month? If the answer is yes, then there's your action plan. If the answer is no, then you could consider trying the same move again at the end of the second card's 6 month interest free period.

Treat it like a formal loan. Work out how much you can pay off it a month, and pay it. Don't give in to temptation to pay off the minimum amount, that's why people get into shtuck. Used wisely, credit card can be your friends. Used unwisely, they are a ravening lion seeking to devour you.

Excellent post CFC.

Sea78

spam post has been removed - was referring to that nothing else

Sea xx

karatedragon

Not sure what you mean by report

firesidemaid

how much is actually on your m+s credit card? is it £3800 or more?

if it is £3800, then you will have to pay off £114 a month at the beginning (obviously decreasing as the balance lowers). but, if you keep this amount up as minimum you will then owe £2432 after 12 months.

with your savings plus interest this will almost cover it. you could pay more a month if you can.

p.s. where did you get your kitchen from. if mfi, did you get nectar points?

lixi

Hi Karatedragon,

I think someone has been spamming - seems to be sorted now ;-)

Lixi

karatedragon

I got the kitchen from Wickes. The units totalled £1027 as I got a staff discount via a friend.

The oven, hob and extractor were £2658 and were a combined appliance deal from Miele which had £500 off the total separates price and a 6 year parts and labour guarantee.

The sink, materials and labour I paid cash for. It is just the Appliances, kitchen tap and Units I got on the M&S card. After all of it I have £2000 in life savings left.

I guess I got used to having savings and now I feel kind of financially naked.

I just worry M&S could write to me demanding the whole lot as I have ehard card companies can and have done that to people.

Sea78

I very much doubt they would do that - they would more likely want you to keep the balance on the card until after the 0% period had ended so they could earn money from you!

I have a few Credit cards and have been naughty at times and have never had requests for the whole lot back. I really wouldn't worry. Easier said than done i know though.

Sea xx

karatedragon

Sea78 wrote:

I very much doubt they would do that - they would more likely want you to keep the balance on the card until after the 0% period had ended so they could earn money from you!

I hadnt thought of that actually. Today I worked out a plan.

I owe 3800 but have £2000 in savings left. In reality I therefore owe £1800.

Plan (a) Keep the £2000 earning interest at about 4% pa and then divide the remaning £1800 by 12 = £150 pcm

Plan (b) Pay the £2000 to M&S now and then do the rest of the above

Plan (c) Pay 1/12th of the balance each month £316 pcm.

Disposable income £455 pcm but I get a back pay windfall on 28th of £200.
My little spreadsheet tells me that if I am careful I will have enough to pay the full balance by July with a disposable reserve of just £77!!

Peace, Love and Light to everyone who has helped on here your all diamonds xx

Now all I need to decide is which plan to put into action! Any help would be appreciated.

karatedragon

any answers to my plans or any better solutions would be welcome

ta

CFC

Hi again, here are my thoughts.

I've got no idea how old you are, if you're really young then what I'm going to say is not so relevant - but I don't think you're in your early 20's as you have the concept of 'life savings' (most young people would not understand those words LOL).

I think having a bit of 'fallback' money in the bank is really important, especially as you only work part time. I'm not so sure that rushing to pay this money back, leaving you nothing at all in the bank, is a good idea, especially as you only work part time. It appears to me that you're nervous of unexpected outgoings, which is why you have a gas service plan and a washing machine insurance plan. Correct me if I'm wrong. To leave yourself with zilch in the bank with that kind of temperament could be a big stress for you.

Now, M&S certainly aren't going to be writing to you demanding that you pay the full amount back. As another poster wrote, the point of them doing credit cards is to lend you money and make a profit off you (sooner or later) therefore they will go on lending you money till they suddenly think you're not going to pay it back ever...so put your mind at rest as far as that goes.

Is it possible for you to look into upping your hours or getting a weekend job that would bring you a bit of money in? Even if it was stacking shelves or working on a Sat night in an offlicence it would bring in some extra money. You could use this extra earnings to start paying off the credit card.

It looks to me like you'd be far better trying to pay it off over 18 months and keeping your savings where it is. If you could pay £211 a month and move it to another 0% balance card after 12 months, you could pay it off over 18 months without leaving yourself with nothing in the bank.

Certainly, whatever you decide to do, don't pay off the £2k from your savings straight away, as you don't need to and it's earning a wee bit of interest while it's in your pocket, rather than in theirs.