Pay 1 or bit of both - but with overdraft consideration

Spec-Chum

Originally posted on another section and it was suggest I post it here, apologies but I am yet unable to post links.


Afternoon, I’m looking for a bit of advice if I may please.

My credit rating is very poor due to various circumstances a few years ago but after many years of struggling I’m finally (yay!) in a position to start reducing my debt and I’m just wondering the best way to juggle the payments about.

My cards/overdrafts are as follows:
Capital One credit card is 30% interest with £1200 closing balance as of this month (limit is £1700).Current minimum payment is £45.

RBOS Credit Card is 28% interest (I think, it’s 2.1% a month) with a closing balance of £950 (limit is £1050).Current minimum payment is £25.

Overdraft is just shy of 19% + monthly £6 charge. When I was constantly topping out my overdraft (£1000) last year the total was around £20 all in. I’m currently not in my overdraft at all – hoorah! Obviously, no minimum payments as such but what’s left in the account “pays” it off.

Now, I can literally just afford to pay either card off in full, but not both. However, this means I would have to utilise my overdraft again for shopping etc but probably only for 1 month. Or maybe best to pay half from each card? Or maybe just up the payments to one or both cards in such a way to avoid going in to my overdraft at all?

Whilst zero debt is obviously the ultimate goal I’m not actually struggling with any repayments and have no qualms on respending on either card if needed. For example I was thinking of paying off the Capital One in full then using this card for all my purchases going forward, this would save me the interest, no? As above though, for this month only that will most likely make me enter my overdraft a little. Nowhere near the full amount though (couple hundred max).

I’m getting a bit lost and confused to be honest lol

andyfromotley

Hey spec,

well done you, it sounds as if you are on the right track!

In truth it doesnt matter too much, your debts are very similar apr's. Pay the capital one card off in full, then attack the RBOS debt. My advice would be once it is paid off to call them and ask if they have any 0% balance transfer offers for you. If they dont close that account so you cant build up the debt again.

Use the eligibility checker on here to see if you qualify for any 0% BT cards as these save you a ton in interest. If you do, use them, closing the cleared accounts. If not utilise your OD as it is cheaper than your cards.

Good luck and well done.

Spec-Chum

Thanks Andy!

I really doubt I'd get any more cards to be honest. I defaulted on a vanquis card a couple of yours ago. I'm not proud but a payment plan is in place and I've never missed a payment on it nor any other card.

I did just try calling rbs to see about any balance transfer deals but there are none at the moment.

That's what I thought tho, with the interest of the other 2 cards, even with the £6 charge, it's cheaper to use the overdraft than keep bitting and bobbing on the others.

Spec-Chum

Wow, OK, that was unexpected.


I've just applied for a Barclay Card with 18 months 0% transfer...and was accepted.


I always thought my credit was shockingly bad. Can't say I've checked in a few years tho.


I guess have some money in your account and available balance on the cards you already have helps?


Saying that I've never missed a single payment on anything, 2 cards, phone all but this Vanquis card that ( and this is genuine ) I moved and forgot I had. I did own up right away when the debt people called me though, and a payment plan was set up.


Well, this makes things easier lol

andyfromotley

Thats a great result, getting the debt onto 0% is a big saving!!

Make sure that you do not run up the credit on the outstanding cards, i'd close them if i was you. Nice one.

Jon_B_2

Congratulations on the 0%er.

I've never had a debt issue and I'm not being judgemental but while you are at it, reduce your overdraft. I've only ever ran a maximum overdraft limit of £250 which is interest free anyway.

£0 in your current account should mean there is no money left. I lived in my overdraft during my student years and he feeling of being constantly in credit on a current account is great.

Spec-Chum

I've not been in my overdraft for 2 months straight now. It is a nice feeling, one that I've not had for at least 5 years. I dred to think how much interest I've paid.

I'm thinking of changing banks now I'm not tied to the overdraft. Some give you money to switch, do they not? Free overdraft on a couple to.

The world is my lobster lol

asparagus1968

great news on the balance transfer. what is the credit limit? will it cover both cards?

Pollygarter

Well done! I am the same.. Have managed to get my credit card debt onto a 0%deal and then hammered away at the overdraft and am now in credit there and on target to clear the credit card debt by the end of the year before interest payments kick back in. Am determined not to pay a penny more interest for debt (other than mortgage) again. I will have paid thousands over the years in interest payments. Just think how much work that is you've done for no benefit to yourself whatsoever.

Chilling.

Spec-Chum

asparagus1968 wrote: »

great news on the balance transfer. what is the credit limit? will it cover both cards?

Easily, even with both cards I'll have over £800 left on it.

Apr is less than the other 2 as well so I think I may even keep the card after I've cleared the transfers, which I'll easily be able to do before 18 months.

I like this feeling, I can finally see the light!

Saying that the capital one card has cashback so I may keep that one for the time being and only spend what I can comfortablely afford to pay off I'm full each month. Apr makes no difference then.