Newbie here.. after some advice

izzybusy23

Hi there

I'm not what I would consider in a lot of debt. I currently have an MBNA loan of 15.9% which is due to end in April '09 @ £104 per month. I also have two credit cards, one with MBNA @ 15.9% balance £980 and Capital One, again @ 15.9% balance £1850. I also have an Argos store card, currently on 0% for six months, balance £460 but then changes to 29% in September. I have funds in my bank account to pay two of these cards off in full and leave £1500 savings. I've just applied for a natwest credit card, 0% balance transfer for 13 months. What I would like advise on is, do I pay off the Capital one in full plus £500 off the MBNA and put the remainding £480 of the MBNA and the £460 Argos card on the 0% one, or do I put all the remainding credit card debt on 0% natwest card and keep the money in a savings account @ 6% interest until the 0% expires?

I know it sounds a bit daft what I am asking, but I have a battle in my brain that is telling me to pay off as much of the credit card debt as possible and what I can't pay off put on 0%, but a part of me thinks I could keep an extra £1k back and keep that in a savings account and earn 6% interest on it then pay it off when the 0% deal finishes.

Your thoughts?

Thanks in advance
Izzybusy23

RAS

Firstly, How much is the credit limit on the Natwest card? And have you checked whether you can transfer both other other CCs or one, and can you transfer the full amount or 90% of the balance?

You obviously need to hold on to enough to pay off the Argos card in full before the 0% ends. Put that in an ISA even for a few months.

Unless you have enough on the new card and the rules allow you to transfer all £2830 of both the 15.9% cards, you need to clear the remainder off from you bank account. No point whatsoever in having money in the bank and paying that sort of interest on debts. Then cut them up and close the accounts.

If you can transfer all £2830 to the new card, then stash the full amount in an ISA (bearing in mind that you can only have £3000 in cash ISAs this year, so stash anything over this in a high interest account and pay it into your ISa next April).

You could have a look at the stoozing section of the credit card bord.

izzybusy23

Hi

The natwest CC limit is £5k, 13 months @ 0% then goes to 14.9% so better interest rate than the 3 I currently have. So would be able to transfer all debt to natwest card. I do already have a halifax ISA account ready to be used @ 6%.

At the end of the 0% period, would I be best to pay it all off, or look for another 0% deal and keep the savings?

I aim to be debt free by May 2009 but also desperately want to be able to buy a home at some point, hence the reason for wanting to keep some savings. As the interest on the ISA outweighs the 0% balance transfer deal, it makes sense to have savings opposed to debt in this case, right?

Thanks for your help!

Storm

If you can continue to get 0% deals, then yes having money in savings is going to net you more interest, however, if you only ever pay the minimum on the 0% card(s) then you'll be in debt for many years, so at some point you're going to need to bite the bullet & pay it off from the savings.

Personally, I'd look at paying of the cards asap and start the savings again if necessary, especially with interest rates rising like they are.

I was shocked by your MBNA loan apr though - if you've got savings built up then it might be worth phoning & asking for a settlement figure for this.

izzybusy23

Hi Storm

Yeah it is quite high. Sneaky sods lured me with a low interest application, but when processed I was told 'sorry, that interest rate isn't available to you, but we have this rate' blah blah blah. At the time I had just got out of a a bad marriage and my ex had really screwed my credit up, so I took the offer. For the past two years my credit has been good and to be honest I've not really thought much about the loan, just that its there and is paid each month. I may phone them and see what the settlement figure is. I don't really like MBNA and don't plan to use them again.

I do plan on paying £100 a month off the CC's until 0% deal ends, then if I can't get another 0% deal then I will pay it all off.

Thanks for your help!