Pay off credit card or loan?

Daisydoll

Hi,

Just after other people's opinion. I am thinking of using my mbna credit card to pay off my loan(if I can get them to agree to a low rate life of balance) but will have to pay £66 fee to lloyds for ending it early plus a 3% fee for balance transfer. My loan rate is 16.9% so if I get them to agree to a low rate I will be saving money plus will be able to make lump sums toward it as well as regular payment when I can and hopefully pay it off quicker. I currently also have £400 sitting in my current account and can't decide whether to put that towards the loan or pay off my Lloyds tsb cc which is 11.8% and has £312 left on it? I need to decide soon as it's silly to keep money sitting in an account when I have debt to get rid off! Do you think after paying the fees for early settlement and transfer I will still save money on my loan?

pikeypikey

So you have 2638.05 of a loan at 16.9%. I suppose it depends on what rate you can get on your CC for a life of balance, Barclarcard do 6.9% (last time I checked and they dont charge for balance transfers).

On the face of it I would say try and pay off your loan first the interest rate is high. Even with paying £66 to pay it off early you will be better off.

Daisydoll

Thanks, I already have a barclaycard at 0% and only have a low limit £800, the reason I can probably use my mbna card is I have a high credit limit enough to cover the loan, but if I use the £400 I will only have to put £2300 on the credit card. I don't really want to risk applying for another card(did look at goldfish 3.9%) as I don't think I'll get offerred enough limit plus I am trying to keep my credit rating good.

david_hellier

If you do decide to swap ensure you repay at a fixed rate, not the minimum, using a standing order not a DD. You have to watch these life deals like a hawk; one slip up and you pay the normal high MBNA rate. And, of course, cut up the card. Credit cards reduce your purchasing power. You may find the following table of use:

Monthly Credit Card Rates and Time Taken to

Payoff £$€1000* and the Interest Paid

Monthly% APR% Time Interest
1 12.68 11y 1m 470.93
1.1 14.03 11y 6m 544.93
1.2 15.38 12y 1m 627.18
1.3 16.76 12y 8m 718.86
1.4 18.15 13y 4m 821.88
1.5 19.56 14y 1m 938.45
1.6 20.98 15y 0m 1071.47
1.7 22.42 15y 11m 1224.44
1.8 23.87 17y 1m 1402.70
1.9 25.34 18y 5m 1612.80
2 26.82 20y 0m 1864.30
2.1 28.32 21y 11m 2170.94
2.2 29.84 24y 3m 2553.00
2.3 31.37 27y 4m 3043.14
2.4 32.92 31y 3m 3693.72
2.5 34.48 36y 10m 4602.18
2.6 36.07 45y 0m 5959.51
2.7 37.67 58y 6m 8211.90
2.8 39.29 85y 3m 12699.05
2.9 40.92 164y 5m 26099.39

*Assumes minimum payment of the higher of £$€5 or 3% per month

Jacks_xxx

david_hellier wrote: »

Monthly Credit Card Rates and Time Taken to

Payoff £$€1000* and the Interest rates

That is one scary table! :eek: :eek: :eek:

Thanks hon, I've cut and pasted that to my desk top for future reference.

Love Jacks xxx

Daisydoll

Thanks I do intend to do a set payment each month, I currently pay £85 a month on my loan and will do the same or a bit more if I swop it over. Why would you reccomend a standing order and not DD?

david_hellier

With a SO you can set up a fixed amount each month. This is easier to budget and will repay faster. With a DD they will constantly only take the minimum payment and, from the table, you will see they will charge a lot of interest and the debt will, in reality, never be paid off.