Opinions please

BritAbroad

Last month we had some major unexpected expenses (emergency repairs), which racked up the credit card. I have always cleared it in full so don't pay interest, but this month is likely to be a struggle. The APR on the card is 11%.

I got a letter from the provider of one of our car loans, offering a payment holiday in December. If I take it, they charge $25, add the month on at the end and continue to charge the interest (3.45% APR). This is the cheaper of the two car loans we have.

I am tempted to take their offer and use the month's payment I'd save to either (1.) pay towards the credit card and hopefully continue to avoid paying interest on it, (2.) pay towards the other car loan (5.99 % APR).

Does this seem sensible? I have been working hard at paying off as much of the 5.99% car loan as possible, and have in effect been paying double the monthly payment each month since August. I think I should be able to clear it in the next 6-9 months. Once it's gone, I'm planning to do the same with the cheaper car loan and hopefully clear it a year or two early.

All opinions gratefully received!

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theoretica

If you pay off the card in full you will pay no interest, but be short of cash. Can you then get by with putting your normal spending on the card and paying it off in full next month? It is a sneaky way of avoiding any interest or charges.

BritAbroad

I'd be able to do that if I needed to. I'm focussed on paying down that card as much as possible though as I don't want to start accruing interest on it. I'm just not sure whether I should take the option of the payment holiday on the loan to give me more options.

rising_from_the_ashes

Personally I wouldn't do it and would do as theoretica suggests and have a "lean" month.

You never know how they will reflect this on your credit file (even if you get verbal assurances it won't affect it) .... not worth having a "late" or "no payment" marked IMHO.

xbethanyx

i think instead of paying double to the car loan, you should have built up an emergency savings pot for instances like this. maybe its something you can think of doing going forward.

Kiri-Heres

For what it's worth, Sainsbury's have a very low cost credit card @ appx. 6.50% pa which is not advertised much to my knowledge. So, this rates at 0.5% per month, taking transfers from other store and credit cards. Could help,they might insist upon having a nectar card, worth a search perhaps ?

wardyface

I just applied for this card and was turned down. I read hereabouts that someone else had been unsuccessful too

I am good rich enough to shop online with them but not rich enough for them to give me credit

I shall vote with my feet