Is it better to clear a high-interest credit card first or a low fixed term loan?

Chasing_cars

I think I know the answer but my minimum balance on the credit card is below £20 at present (I pay £50pcm of a £750 balance) whereby my loan is £260pcm of £8,585.

I also have two bonuses this month and next in the £800-£1,000 range.

Any thoughts?

PS: This is the only major debt minus a student loan from 2006.

asparagus1968

So these are the only interest charging debts you have?


Do you mean the minimum payment is below £25 ?


Are you allowed to make extra payments to your loan / pay it off early?


If it were me I'd pay off the CC in full with the bonus and the usual £50s , close down the CC fully. Then ask loan company if paying a lump sum could be done.


Someone cleverer than me will be along soon I expect, see what other ideas come about.

Chasing_cars

So these are the only interest charging debts you have?
Yep the only debt and once all cleared will be looking into a mortgage again as on a good wage/good credit score.

Do you mean the minimum payment is below £25 ?
£16.31 is this months min payment.

Are you allowed to make extra payments to your loan / pay it off early?
No fee's incurred if I pay back any earlier, although if I continue to pay this year I might then look at taking a new loan with a lower interest rate?

PS: Thanks for taking the time out to reply.

ellesbellesxxx

What is the interest rate on the card?

Chasing_cars

ellesbellesxxx wrote: »

What is the interest rate on the card?

Last statement read: 1.937%

Thoughts?

ellesbellesxxx

Ok, so presumably you are getting charged about 15 pounds a month interest?Over the next year it will cost you about 170 pounds in interest ( I haven't got time to sit down and work out exact amounts but you are clearing about 35 a month after interest is paid)
Surely, if you paid off this CCwith your bonus, you could then put that extra 50 a month towards the loan to pay that down?


Other option is to switch thisCC to a 0% card and throw all extra moneys at the loan whilst you pay the CC down (although if you take this course, I would suggest you calculate you will clear the CC in this time)