Clear the card or pocket the cash - advice needed

greyville

Hi all,

Thanks to MSE's guidance, I just got £3,397 back from barclaycard on a PPI claim.

I current have just over £3,000 to pay off on the barclaycard.

The interest rate is 29.9 per cent.

At the moment I pay about £100 a month minimum repayment.

Of that, £70 goes on interest/new transactions (even though I haven't used the card in two years) and £30 goes on paying off the balance.

So my question is - should I:

a) use the PPI cash to pay off the card?
b) pocket the PPI cash and keep paying £100 a month?
c) or something in between?

I have a feeling noone will advise b) but I'm wondering if c) might be preferable to a).

Apologies for being such a finance novice and thanks in advance for your help.

scottishblondie

Pay it all off. There is no point in having the cash and paying 10 times the amount out in interest on the CC that it will be making you in a savings account.

greyville

scottishblondie wrote: »

Pay it all off. There is no point in having the cash and paying 10 times the amount out in interest on the CC that it will be making you in a savings account.

Thanks.

One thing I don't know is - say I chose not to pay it all off.

Is there any way I can increase the amount that comes off the balance?

For example, say I upped my repayments from £100 a month to £200 a month, would it take off £130 off the balance or more?

cutestkids

There really is nothing to think about if you are paying £70.00 out of every £100 in interest then you will still be paying the card in 10 years or more.

Just pay the card off and use the £100 you are paying each month to build up some savings.

ky822000

I agree about paying off the balance, but the dilemma for me would be about them closing your credit card once it has a nil balance. IF you are planning on making sensible purchases (for the Sec 75 protection, or to help your cashflow and paying off in full, I would be tempted to pay off most of the balance and leave a manageable balance (say £50 - £100) to ensure the credit remained open.

If you are looking at applying for more affordable credit in the future, then pay off the full balance and close the account.

Mort

definitely a)

then close the account and start saving what you were paying each month.

plum44_2

Its a no brainer..pay off your credit card and save up £100 a month. Bliss.

katy_ann

I would definatly pay off the card! x

[Deleted User]

plum44 wrote: »

Its a no brainer..pay off your credit card and save up £100 a month. Bliss.

^^ what they just said ^^ plus £100 pm after 1 year is

a) totally lush holiday somewhere Sharm El Sheikh or a Med Cruise
b) Round the world air ticket
c) half a decent 2nd hand car
d) a new 50cc scooter & all the gear
e) any of the stonking brand new tech whiz ipad6-internetTV-flatscreenLCD-surroundsound thingywhatsits


Think about it - the treat will feel better if you've saved up for it first

gisaster

If you spend it you will beat yourself up for not paying off the card. I'm busting a gut trying to pay back my only creditor that is charging me interest and would love the opportunity to pay it all back immediately. Go for it, I say

Ultrasonic

ky822000 wrote: »

I agree about paying off the balance, but the dilemma for me would be about them closing your credit card once it has a nil balance.

Why would Barclaycard do that? They have a customer who has been paying them loads of money in interest, so I'm sure they'd want to hang on to such a customer in the hope they will run up another debt and start paying them lots more interest.

Definitley pay off the full debt, it's an absolute no-brainer.