Newbie

goggers_2

Hello

I didn't want to crash in on one of the existing threads so thought i'd start here. It's good to see so many supportive people out there in the same situation and working so hard to get out of it. I'm seriously impressed with how much debt some of you have cleared.

My situation isn't really that extreme, i've just been very silly and buried my head in the sand over the last few years but now i've woken up (thanks to my money saving expert crazy boyfriend who was horrified at my debt but loved me all the same) and i'm determined to sort myself out.

I've got some savings, around 1K and don't know whether its best to pay off my bank loan (shocking interest rate 18.9%, don't know what i was thinking, obviously i wasn't) or to just knock a chunk off my credit card debt (16.8% APR). What d'ya think?

Goggers x

sparklymessygirl

Hi Goggers,

I'm sure someone with more detailed advice will come along soon but in the meantime...
will you be paying off the loan in full?
are you likely to be able to get a 0% credit card so you could do a balance transfer? or at the least a low life of balance credit card?

Sparkly

goggers_2

Yep, would be paying off the loan in full.

I applied for a 0% balance transfer (the fly&buy morgan stanley recommended on this site) but was refused, i've moved around a lot over the last few years and apparently my credit rating was just below what they required.

sparklymessygirl

Maybe pay off the loan then as psychologically you will have got rid of one debt and it is at the higher rate. With that off your record you will look in better shape next time you apply for a credit card. I'm not sure how long you would need to wait before applying somewhere else but do throw the money you were paying as loan payments at the credit card to reduce it as fast as you can. Have a look at the Whatsthecost website too,

good luck
Sparkly

goggers_2

thanks sparkly.

I know what you mean, it would feel good clearing that extra debt. My initial debt clearing plan was based on paying off the one loan, then increasing my credit card payments and then saving up to pay off my other loan which costs me £105 a month.

I'm not in debt crisis, i can afford my repayments every month and have enough (if i stick to my £200 budget) to put £300 away every month on the credit card or into savings to clear the other loan.

I'm moving in with my boyfriend towards the end of this year and i just want to clear as much of my debt as i possibly can as i don't want him to think of me as a financial liability.

I suppose its about working out what costs the most in the long run, loan or credit card, but i'm a maths dunce and trying to understand it all is a lot harder than i was expecting.

sparklymessygirl

I haven't had to use it myself but with the Whatsthecost website you can input all the debts and all the different rates and then it can generate various options to suggest in what order you should pay it off - like you I get bamboozled by figures really easily

You can look forward to a nice fresh start :beer:

Sparkly

Crown

Hi, Are there any early repayment penalties if you repay the loan early? sometimes they charge extortiate fee's using the "rule of 78" what is what a lot of loans use.

How much is your credit card debts? and how long left have you to go on the loan repayments?

If there is no penalty I would I pay off the loan and then use the monthy payment you will save on it and pay it off the credit card.

goggers_2

just under 4k on the credit card, the loan is currently a couple of quid over a grand, there is an early redemption fee, its a couple of days interest.

Ytaya

:hello: Hello!

Why don't you post a Statement of Affairs (see this post for first timers) so we can see exactly what you debts, expenditure and income are and we can give better advice?

As someone noted above, for the sake of the small difference in APR it might be worth paying off the loan for the psychological boost it'll give you. Plus you can then put your old loan payment amount towards your cc every month.

goggers_2

Thanks Ytaya, I will put a Statement of Affairs on as soon as i get a chance. I don't have internet access at home, so only get a chance to look when i'm at my feller's house or during work lunch time like now.

david_hellier

Looks to me like your situation is fairly manageable with an SOA. Please post.