Would you spend? To reduce debt?

redpete

assj wrote: »

I know that it sounds really stupid!

I think so

BUT, I was thinking that I should be spending on my credit card to save the interest.

This is what I mean;

If I pay my monthly bills with my credit card and then pay the full amount that I have just paid out back to the card (instead of just paying the bills) I will then save myself 30 ish days interest for that amount of money.

Is this something that I should be doing, as you can see I am trying my very best to shift this debt quickly and have now started to look at new ways to save anything that I can.

All your credit cards have balances - so you are paying interest on all of them?

You plan to pay bills using a credit card and then paying this amount into the credit card straight away? Why not pay the bills from wherever you have the money to pay into the CC account - then it goes nowhere near the CC and you pay no interest on it.

fracturedsun

I think I see where you are getting confused OP if you pay off a balance in full every month then you get 30 days interest free however if you don't pay it off completely you pay interest per day on the complete balance. In that case it is better to pay as much money as you can as quickly as you can so saving interest for those few days.

JimmyTheWig

How about on payday, make a payment to your credit card to cover everything you're going to spend on card that month.
Then rather than spend from your current account spend on card.

Your credit card balance (and so the interest you will be charged) will be lower for the days between payday and when the bills are due.

Is that what you meant?

It should work, as long as
(a) you are careful not to overspend on your credit cards - only use them for what you have budgetted for.
(b) the bills you are thinking of can be paid by credit card with no surcharge.

gizmo111

JimmyTheWig wrote: »

How about on payday, make a payment to your credit card to cover everything you're going to spend on card that month.
Then rather than spend from your current account spend on card.

Your credit card balance (and so the interest you will be charged) will be lower for the days between payday and when the bills are due.

Is that what you meant?

It should work, as long as
(a) you are careful not to overspend on your credit cards - only use them for what you have budgetted for.
(b) the bills you are thinking of can be paid by credit card with no surcharge.

and (c) the bank doesn't reduce the card limit.

DVardysShadow

I can see what OP is getting at.

Essentially, he is saying to make any purchase on his card, but put the cash immediately to the card - or even at the beginning of the month. So rather than pay back £100 to the card at the start of the month, and buy goods for £400 through the month, he is suggesting paying £500 off the card at the sart of the month and then making his £400 purchases off the card during the month.

On an interest bearing card, this will reduce the daily balance on which interest is paid. I would say it is a good idea subject to not making unnecessary spends in carrying the process to far.

The other thing to do, of course, is to use this method to shuffle debt to lower interest cards. So put the payments to the higher cost cards, make the purchases on the lower cost cards. In my example, £400 a month could be shifted this way, assuming that lower interest credit is available

backinbusiness

gizmo111 wrote: »

and (c) the bank doesn't reduce the card limit.

I too would have reservations about this happening.

This could scupper his plans completely.

BiB

[Deleted User]

JimmyTheWig wrote: »

How about on payday, make a payment to your credit card to cover everything you're going to spend on card that month.
Then rather than spend from your current account spend on card.

Your credit card balance (and so the interest you will be charged) will be lower for the days between payday and when the bills are due.

Is that what you meant?

It should work, as long as
(a) you are careful not to overspend on your credit cards - only use them for what you have budgetted for.
(b) the bills you are thinking of can be paid by credit card with no surcharge.

Yes this must be what I meant, I wanted to save a small amount of interest

[Deleted User]

I don't know why, but I thought that everything I spent was subject to 30 ish days interest free. So I was going to pay the card and then spent it again with the hope of getting 30 days interest free on the amount spent.

Now I am confused, but I thought I knew what I was saying at the start...

pleasedelete

I set up all of my cards to pay the balance in full every month. You get interest free from purchase date to payment date. I get points etc on most of them.

You would only pay interest if you didn't pay them off in full every month or if you withdraw cash.

I pay insurance etc on it but can't pay council tax or utilities where I live (this may vary).

Poosmate

You can reduce the amount of interest you pay a little but you do have to be organised and stick rigidly to your budgetting.

I've started doing this to reduce my overdraft, spending on a low interest card through the month then the night before pay day I pay the card off from my overdraft. It means my overdraft is only nearly maxed for one night per month.

The figures:

O/D 19.9%, low % card 5.0%, spends £400.

The facts:

Going £400 less into my overdraft each month for about 20 days hasn't really knocked as much off the interest I'm paying as I thought it would. To be honest though, it's early days and I have maybe got the trailing interest to get over yet. I should know if it's working when I get my interest figure for next month.

Poo