Interest free card

Marie_Williams

I have a debt on an 0% card £2100. The interest if free on purchases for 19 months, I took it out in September. Should I cash in an ISA and pay it off now or pay it off slowly. I do not intend to purchase anything on it again. I would really like to get rid of it as I don't wish to spend anything more on it. I am with Santander and want to get a 123 card with them instead.

Farway

Personally I suggest you cash the ISA & pay the debt off, just for peace of mind

It will also show on your credit records as paid, and no outstanding debt, which may help with the new application, but be aware credit checks look at available credit, not what you actually owe, so do not cancel the first card until you have second one

Savvy_Sue

The answer to this question isn't age dependent, so I'm moving it away from the Over 50s board.

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chattychappy

If you're worried about spending more on it, then why not just cut it up? And how would getting another credit card not be any different...(from the point of view of temptation)... or perhaps I misunderstood.

I'd just keep it. Pay it down out of your income whilst keeping your ISA intact (and presumably earning a little extra income). If you do run into difficulties, you could always cash it in later. You could always apply for a 1-2-3 card now. No need to wait until you've paid off the previous one. (Unless you're really looking distressed, having a couple of cards isn't usually an issue.)

planteria

what about just making the minimum payments, and leaving the money in your ISA, generating some interest, and clear it at the end of the interest-free period?

chattychappy

planteria wrote: »

what about just making the minimum payments,

As a footnote, I'd always pay slightly more, if only £1 more. This will avoid any "minimum payment" marker on the credit file.

planteria

im not sure such markers exist though, chattychappy

i have always had my DDs sat as either 'Full Balance', for Spending cards, or 'Minimum Payment', for Balance Transfer cards.

chattychappy

planteria wrote: »

im not sure such markers exist though, chattychappy

i have always had my DDs sat as either 'Full Balance', for Spending cards, or 'Minimum Payment', for Balance Transfer cards.

They certainly do. I've seen them on my own Experian report in respect of my Tesco card.

Annoyingly I got a "minimum marker" when the minimum was also the full balance because I had only a couple of quid outstanding which I paid in full.

It is a bit of a fiddle if you use DD for minimums. You would have to make an extra manual payment of, say, £1. At the same time you have to understand the interaction with the DD in case the DD is reduced. (I don't use DD, but I believe the interaction depends on the card and the timing of your manual payment.)

planteria

do you think that a long history of paying minimum balances, by DD, on balance transfer cards is not beneficial to a credit file?

chattychappy

planteria wrote: »

do you think that a long history of paying minimum balances, by DD, on balance transfer cards is not beneficial to a credit file?

It is difficult to know how it would be interpreted. The CRAs do not record whether the card is a "balance transfer card" or that you pay by DD.

Rather like the "cash withdrawal" flag, I expect it is negative when taken into account with other factors - eg close to your limits + overall amount of credit high. Ie in these circumstances it is a sign of distress.

I can't see that it is positive, but perhaps much of the time it doesn't matter. As I only pay manually, it is no problem for me to "round up" by a £1 or so to avoid the flag when I make a payment.

JKSandy

"The CRAs do not record whether the card is a balance transfer card"


CRA's do record if you have a promotional rate, which a 0% BT offer would fall under, which is seen by the lender.