Should I pay off in full?

greensalad

Hi everyone,

I'm trying my best to negotiate new ways to shift my debt around to pay it off quicker than my current plan. You can see from my signature that I have various amounts of debt on high interest credit cards.

My question is, one of my CC's is £800 on 34.9% APR. Costing me about £20 p/m.

I currently don't really have the spare cash to pay anything but the minimum. However, for my second job I stash away £100 per month in order to pay my tax bill.

Seeing as saving rates are so low, and CC interest is so high, I've been considering sticking that £100 onto my credit card in order to reduce the interest. I would then end up maxing the card out again come tax bill time (next Summer I think) but at least for the next 6 months I wouldn't be paying interest.

I have a fear though that somehow my credit card will no longer be useable come that time. I don't know, maybe something will happen and Barclays will withdraw it. And then that money is gone.

I've also considered paying my £800 CC off in full every month with my salary, then respending it (It would eat up all my spare cash so I would essentially use my CC as my day-to-day living each month). But again, I have a fear at the back of my mind that storing money I NEED on my CC is not a good idea.

I have tried applying for the Capital One short-term 0% card (0% until July 2015) but got rejected So it seems no credit cards will accept me. I tried for a Tesco one last week and also go rejected so am fearful now of applying more and destroying my credit rating. I'm currently waiting to go onto the electoral roll, as I applied for it about 6 weeks ago but my credit report hasn't updated.

sentientpoet

Unless you have a high degree of discipline, using tax set-aside for bills can be a dangerous game as HMRC are a completely different kettle of fish to unsecured debt in my opinion. I now run my own business but won't touch the corporation tax element as I don't want to find myself in a position when it's due that I have to find the shortfall due to some unexpected problem that could upset my best intentions.

However, someone with more experience on that front may well have a better perspective.

For the cards, how much do you have each month for groceries/general spend (not cash spend)? One option would be to pay that amount off the 771 outstanding on card 1, then use the 800 limit card 2 (which currently has not much on it) to spend the equivalent. Then next month pay off card 2 with the grocery/general spend allowance, and use it again - rinse and repeat.

That way, you clear a chunk off the big balance, and pay off the other balance in full every month, which should save a load of interest. Even better, if you can then hide the bigger limit card somewhere for emergency use only, you are restricted to the 800 limit of the second card which lessens the chance of temptation to overspend.

greensalad

sentientpoet wrote: »

Unless you have a high degree of discipline, using tax set-aside for bills can be a dangerous game as HMRC are a completely different kettle of fish to unsecured debt in my opinion. I now run my own business but won't touch the corporation tax element as I don't want to find myself in a position when it's due that I have to find the shortfall due to some unexpected problem that could upset my best intentions.

However, someone with more experience on that front may well have a better perspective.

For the cards, how much do you have each month for groceries/general spend (not cash spend)? One option would be to pay that amount off the 771 outstanding on card 1, then use the 800 limit card 2 (which currently has not much on it) to spend the equivalent. Then next month pay off card 2 with the grocery/general spend allowance, and use it again - rinse and repeat.

That way, you clear a chunk off the big balance, and pay off the other balance in full every month, which should save a load of interest. Even better, if you can then hide the bigger limit card somewhere for emergency use only, you are restricted to the 800 limit of the second card which lessens the chance of temptation to overspend.

Yeah, that does make sense. I just feel uneasy about putting that money towards anything but the tax bill.

I only spend £160 on groceries and household a month, so not that much at all, and a very small impact on my CC. Also that's in a joint account with my partner so I would have to get him a card for my CC so he can still buy things when we need them.

I never overspend which is good I guess. I don't keep the cards on me anyway. But I'm just trying to be a bit clever and move stuff around a bit. Annoyed I got rejected for a 0%, would have been a lifesaver but I guess because I'm young and have debt I'm not really worth it for any more cards!

greensalad

I've also realised something about my credit report. My Experian report doesn't show my credit card as an open line of credit. It shows 3 Barclays accounts, one with an overdraft (the other two are joint accounts with my partner).

My £800 credit card isn't showing up. Neither is my Natwest account.

My Natwest account has long been in OD so maybe it's best I don't have it registered. But my £800 credit card, I pay off the minimum or more every month. Would it actually benefit me to have that registered as proof of me keeping a good credit card? Once my electoral roll updates, would that boost my credit rating and possibly make me eligible for a 0% interest card?

How do I even go about adding a CC to my credit report?

It also shows as a negative factor that I have no settled credit accounts. If I paid off my £500 interest free overdraft then maybe I could have one fully settled account. It's interest free so I've been ignoring it and preparing to pay it off when other high interest things are paid off but I'm wondering now if I should throw all my money at it in order to clear the "negative factor" on my report.