What is my best option?

Pepperoni

By the end of the month I'm going to have enough saved to pay off either loan or credit card.

The loan is at 7.9% APR and currently has 31 months left. I'll save around £600 paying this off compared to what I would incur if I carry on paying over the remaining term.

The credit card is 0% but due to run out at the end of October when it will change to around 17.9% APR. I'd be looking to try and balance transfer anything outstanding (but nervous, what if I'm not accepted? I've never defaulted etc so can't see why I would be but you never know).

After this month, and by October, I should have another £3000 to throw at whichever debt is remaining, and then the remainder paid over the next few months from then.

Am I right in thinking my best option is clear loan, then tackle CC - as long as I can get the remaining balance transferred in October?

sourcrates

Pepperoni wrote: »

Am I right in thinking my best option is clear loan, then tackle CC - as long as I can get the remaining balance transferred in October?

Yep, sounds like a plan to me, if your credit is good, you should have no trouble with the card deal, even if you do, you can still save over what you would have paid.

thefrugaltrial

I would clear the loan now as you will probably be able to transfer the CC to a zero balance card (however, this obviously depends on your credit rating/salary and balance plus you may want to take into account the history applying for a new CC will leave on your credit rating. Also, is there any fee for clearing the loan early.)

However, more pressing, why are you 'saving' to pay off debt? Why haven't you just paid what you save each month towards your debt on a monthly basis?

[Deleted User]

What is the balance on the CC?

BalanceTransferDude

thefrugaltrial wrote: »

I would clear the loan now as you will probably be able to transfer the CC to a zero balance card (however, this obviously depends on your credit rating/salary and balance plus you may want to take into account the history applying for a new CC will leave on your credit rating. Also, is there any fee for clearing the loan early.)

However, more pressing, why are you 'saving' to pay off debt? Why haven't you just paid what you save each month towards your debt on a monthly basis?

Does applying for a new credit card add a bad mark on your credit rating? I wasn't aware that this was the case...

Pepperoni

thefrugaltrial wrote: »

However, more pressing, why are you 'saving' to pay off debt? Why haven't you just paid what you save each month towards your debt on a monthly basis?

For the loan the bank told me it worked out better if I saved the full amount then paid, because otherwise I wouldn't make as much impact on the interest. Looking into it I'm not sure how truthful they were.

CC is 0% interest so no point in paying other than minimum repayments when I get 3% interest on the savings in a bank account.

Pepperoni

Bedsit_Bob wrote: »

What is the balance on the CC?

Both similar amounts. Loan is £6125 (ish) and CC is £6250 (ish). Exact amounts in my signature.

bambos

If you clear the loan now is it a given that you will have enough money to clear the CC by October? 0% CC's are not guaranteed and can be refused for various reasons (as I know all too well) I would personally be inclined to clear the credit card first if I knew I couldn't pay it off come October and then make extra payments on the loan to clear it quicker. If you know that you can save enough to clear the CC by October I would pay off the loan now and come October pay the CC off in full.

Good luck.

Pepperoni

Thanks. No, won't be able to pay the CC in full. Should be able to put £3000 to it but that's about it by October.

bambos

Pepperoni wrote: »

Thanks. No, won't be able to pay the CC in full. Should be able to put £3000 to it but that's about it by October.

Hmm it's a difficult one. Are you quite confident you can get a 0% ie? have you ever been refused a CC, how's your credit rating? If you are confident you can get a 0% in October then I would go for it & pay off the loan, come October shift your CC to the new card and then plough everything into getting this paid off.

Pepperoni

My theory is (how reliable that is I have no idea...) that I will be without the loan which was originally for 8000... Meaning that I have that 'available' again on my credit if that makes sense?!