Overpayments not making much difference

Brokechick

I'm sure that the interest rate isn't the worst out there - my statement says 1.2408% - monthly I presume - just thought that the monthly payments and interest would come down by a greater amount each month and not a lesser amount. I have a fixed amount to pay so every month my overpayment amount will go up, but based on these figures it seems endless ��

Brokechick

PeacefulWaters wrote: »

Interest is reducing each month.

Balance is reducing by direct debit plus overpayment (and increasing by interest charge).

Paying £75 extra on a 15% rate will reduce the interest charge by around £1 a month. So you wouldn't expect to see any significant improvement at the start and it could be masked by number of days in the statement period differing.

Multiple months of £75 overpayments will have a cumulative effect though and this will accelerate the interest saving over time.

The other issue is that as the debt reduces so does the minimum direct debit payment. This means that your combined minimum payment plus £75 is reducing each month. You might be better paying a fixed total (e.g. £210 a month) rather than a fixed overpayment.

You're expecting too much too soon. Long term discipline will get you out of debt and you've made a good start. Keep at it.

Thanks - my usual thing of expecting instant results (am the same with diets too!!) I will persevere - hopefully one month I'll really notice a difference and that will spur me on even more.

YorkshireBoy

Brokechick wrote: »

I'm sure that the interest rate isn't the worst out there - my statement says 1.2408%

That's 15.9% APR...better than new applicants would get!


Why aren't you looking at transferring some/all of this to a 0% BT card?...low income?...debts elsewhere?


A question: Are you still spending on this card?

shop-to-drop

Why not find an overpayment calculator and put the figures in. Will help you to visualise how fast the overpayments are bringing the debt down. They can be really motivating too. Sorry I can't remember the name of the one I've used in the past maybe someone will be able to add a link or you may find one on MSE recommended by Martin.

PeacefulWaters

Paying £200 a month, spending nothing new and no rate change ... This will have you debt free within three years.

Keep at it!

YorkshireBoy

shop-to-drop wrote: »

Why not find an overpayment calculator and put the figures in. Will help you to visualise how fast the overpayments are bringing the debt down. They can be really motivating too. Sorry I can't remember the name of the one I've used in the past maybe someone will be able to add a link or you may find one on MSE recommended by Martin.

http://www.whatsthecost.com/creditCard.aspx


Once you've hit 'calculate' you'll see an option "what if I paid an extra £". Entering data in here will show you the reduction in time to repay.

shop-to-drop

YorkshireBoy wrote: »

http://www.whatsthecost.com/creditCard.aspx


Once you've hit 'calculate' you'll see an option "what if I paid an extra £". Entering data in here will show you the reduction in time to repay.

That's the one, thanks for the link. Always think it is fun to use and fascinating to see all the details in black and white.

redpete

Paying an extra £75 should save approx 93 pence in interest the next month.

When you paid just minimum the balance reduced by £67. When you paid £75 extra the balance reduced by over £130.

I think your problem is that you see the balance as £5xxx all the way through because £75 is relatively small compared with £5600+.

Every £75 you pay off now will save you around £11 interest over the next year.

If you only pay the minimum the balance after 2 years will be about £4440; if you pay off an extra £75 every month your it will be around £2830; if as suggested above you pay a total of around £200 a month (add more as the minimum reduces) it will be around £1980.

I suggest it is worthwhile.

YorkshireBoy

redpete wrote: »

I reckon you are paying annual interest of around 13.5%.

It's 15.9% APR...see post #14.

redpete

YorkshireBoy wrote: »

It's 15.9% APR...see post #14.

Lots of posts arrived whilst I was playing with the spreadsheet :-)

I've now adjusted my numbers.

Still worth carrying on with overpayments though ;-)