Save or clear these debts?

chelseablue

Me and my partner have a few debts hanging over us and I keep going round in circles of when to clear them.

We are in a fortunate position in that most months we have quite a bit left over.


What I normally do is the day before pay day I move over whatever is left into the savings account.


But we have the following that we owe:


£377 Next account


£450 Partners Capital One credit card


£1,190 My Barclaycard (normally balance is £0 but I purchased car insurance this week)


£180 Money owed to uncle


£190 Money owed to Mother in Law


Total £2,387


Get paid next week and its looking like the day before we will have £1,200 that I would normally save.


Im thinking maybe save £600 and use the other £600 to clear Next and take a bit off the Barclaycard and then keep repeating each month until all debts are paid.


Or is there another better idea?

sugarcube84

Well normally the recommendation is that it is pointless saving when you have debts especially if there are accruing interest.


For me I'd get rid of all the debts especially as you could potentially get rid of them in 2 months.

ShirePiskie

I would imagine any interest you may accrue in savings would be far less than interest you are paying on debts (especially the Next account).

I would maybe look at putting a couple of hundred away as an emergency fund, so you don't have to go further into debt if something happens, but look at building that up more, and get into the good habit of doing so, each month.

WantToBeSE

How much savings do you already have?

If you have over £1K in savings already, i would clear the debts before saving anymore.

chelseablue

We have more than £1k but it is not accessible without giving notice and loosing interest

ViolaLass

In an emergency, you could use either of the credit cards you've got. Clear those debts and then save.

lee111s

Clear the debts ASAP then you can save as much as you like without worrying about debts and interest

rockm87

Completely agree, clear the debts!

bouncydog1

What are the interest rates on all of these debts? When is your Barclaycard statement due to be issued and what is the payment date? How much can you save next month?

When will next months savings sweep be due and how much can you save in the month.

My gut feeling would be to pay off Next in full and also get rid of relative loans (creates good relationships) then pay off balance on Cap one, leaving Bcard to pay in full next month, but really need info requested to try to give a better answer.

chelseablue

bouncydog1 wrote: »

What are the interest rates on all of these debts? Barclaycard interest rate is 16.9%, interest free period is 56 days from date of transaction
APR on my Next account is 24.99%, last month I was charged £4.22 interest




When is your Barclaycard statement due to be issued and what is the payment date? How much can you save next month? Barclaycard statement will be issued 1st August, payment due by 31st August

When will next months savings sweep be due and how much can you save in the month. I get paid on the 16th of the month, so whatever is left on the 15th gets transferred to savings

My gut feeling would be to pay off Next in full and also get rid of relative loans (creates good relationships) then pay off balance on Cap one, leaving Bcard to pay in full next month, but really need info requested to try to give a better answer.

Answers in bold

bouncydog1

Will you be able to put aside enough next month to pay off your Barclaycard in full before 31 August (I am assuming you have a DDM set up for minimum)? If so I would, if it was me, do the following:-

1. Get rid of next immediately as there will be residual interest to pay anyway and when the statement comes out pay off the interest straight away and get rid of the account.

2. What is partners Cap One rate? If higher than Barclaycard pay it off in full.

3. Pay off relative debts or if you can't pay Bcard in full next month then put aside toward BCard bill. Either way you can pay all of this off by the end of September which would be fantastic.