Coffee, Cake, Yarn - New Start

CoffeeCakeYarn

I agree redo! I think we should start campaigning to get joey to start a diary!!

CoffeeCakeYarn

Morning all,

Been reading through some threads today which has given me a bit of a quandary. It's maybe not a right now quandary but it's something I'd like to get some advice on if possible.

My target debt is MBNA which has 0% until November. If everything goes to plan I *should* be able to pay it off by then, but I'm not panicking if I don't. At worst there will be less than £100 on it, and if there's more I'm pretty confident I will be able to balance transfer, but I will look at the figures closer to the time.

My plan was to then move on to CC number two which has about 30 months 0%.

However....

I've just read a thread about loan interest, stating that if a loan is paid off early then interest rates are not fixed and you pay less interest. I currently have a loan at 7.9% with around £9600 left on it. Here's the question. I'm eligible (90%) for a 0% cash transfer CC. Should I take it, use as much as I can to pay off as much of the loan as possible and tart when the time comes? The loan is the only thing I'm paying interest on at the moment, and is not due to finish until Jan 2020.

Any thoughts?

Treadingonplaymobil

CoffeeCakeYarn wrote: »

Morning all,

Been reading through some threads today which has given me a bit of a quandary. It's maybe not a right now quandary but it's something I'd like to get some advice on if possible.

My target debt is MBNA which has 0% until November. If everything goes to plan I *should* be able to pay it off by then, but I'm not panicking if I don't. At worst there will be less than £100 on it, and if there's more I'm pretty confident I will be able to balance transfer, but I will look at the figures closer to the time.

My plan was to then move on to CC number two which has about 30 months 0%.

However....

I've just read a thread about loan interest, stating that if a loan is paid off early then interest rates are not fixed and you pay less interest. I currently have a loan at 7.9% with around £9600 left on it. Here's the question. I'm eligible (90%) for a 0% cash transfer CC. Should I take it, use as much as I can to pay off as much of the loan as possible and tart when the time comes? The loan is the only thing I'm paying interest on at the moment, and is not due to finish until Jan 2020.

Any thoughts?

Hmmm. My initial thought was 'yay, go for it' but what if you do it, then one or more of your 0% transfer periods ends without the card in question being paid off, and you can't get a new 0% deal because you have some much on CCs? Is that likely? Others who know more than me will advise more sensibly.

Somewhat unrelated, I am also with everyone who said about never spending on CCs again. We just cannot trust ourselves with a CC, no matter how disciplined I think we will be.

CoffeeCakeYarn

Well, I mean the plan would be to not accrue more debt, only to pay off what I have, so in theory I should become more attractive to lenders for a balance transfer than less. Everything is showing as 'excellent' and 'affordable' currently on the credit file thingy, so unless a significant change in circs happened then in theory I should only become more appealing? I think, I don't know.. this is why I needed your input

The CC with the cash transfer would be used in the same way as the MBNA is currently, i.e. CUT UP AND NOT USED. I'm confident I wouldn't be accruing more debt (over and above the initial transfer fee) by doing this, but I just can't work out in my head if it's the right decision. I've never dealt with loans before. I need a proper adult

joeyjimbles

Thanks, I'm flattered but I don't think so yet - not unless I get really serious about the mortgage overpayments and I'm not there yet.
And you're welcome for the mushrooms - can't remember where I got the suggestion from, it's hardly a recipe and probably totally inauthentic but it's so easy and tastes great.
Not all loans are the same - has yours has been frontloaded so you are paying off interest first? Are there any penalties, probably some but are they big enough to offset any gains from paying off the loan early. Oh, and how much would the balance transfer fee cost? So if you add up all the costs would it be worth it - probably the answer will still be yes but at least you'll know what it will cost to do it. Paying less interest is typically always preferable to paying some interest obviously but just be best to look out the info on your particular loan, or call them up if you can't find it.
Incidentally the stew was lovely and there are 4 portions in the freezer. Something with the frozen haddock that's been lurking in the freezer since before Christmas tonight - I often do a tomato, red pepper and olive sauce and steam it on top of that but it's too similar to what we ate last night so will have to have a trawl through the cookery books.

CoffeeCakeYarn

Honestly, I have no idea if the loan is frontloaded. It's with Zopa, I'm going to log in and have a dig to see if I can find any information on it. I do know there are no penalties and charges for early and/or overpayments, I already made one lump overpayment which then meant a readjustment of monthly payments, starting with a lower one before rising again, which makes me think that was an interest adjustment and it's not frontloaded.

2.7% fee on cash transfer.

The stew sounded lovely, I've got a freezer lurker for dinner tonight. I'm pretty confident its either spag bol or curry. I'm kinda hoping it's a curry or that will be spag bol three nights in a row, groundhog day haha. I don't mind though, it's cheap, cheerful and yummy, so I'm happy to eat it 3/4 times a week!

CoffeeCakeYarn

Found this...

What happens if I make an extra repayment?

• Making an extra repayment towards your loan reduces the outstanding balance to be paid off - which reduces the total amount of interest you'll pay.

So not frontloaded I would assume?

joeyjimbles

Well that seems positive. When you made the additional payment, did it do anything to the length of time you have to pay it off? If you are planning on getting it all paid off sooner then that might not be an issue but there might be a final payment that you have to make to get out of the agreement.

I don't have any loans but OH took one for the car which we paid off years early and we had to apply to them for the final figure which was a little more than it appeared on paper - something to do with interest, I can't remember exactly. Would hate you to get caught out when it's so simple to ask at this stage.

CoffeeCakeYarn

It didn't change the length of agreement, it just lowered the monthly repayments, the first month significantly - for example

Lump Payment - £2000
01/01 - £320
01/02 - £380
01/03 - £380

So I imagine the lowest payment was the interest readjustment? I know for sure there is defo no penalties or fees for repaying early at all. I quadruple checked it when I took it out.

I was planning on just letting the loan run its course for now, but overpaying when I had cleared the CC's. However as it's the only debt I'm paying interest on now it made me think about the CC cash transfer facility, and the possibility of shifting the loan, or some of it at least, onto 0%.

Sunkencosts

I've been thinking of doing something similar actually - We have a 7 year loan at 7%, and now we have CC with space on at 0%. However, I'm worried that actually the minimum payment might be higher than we currently pay on the loan - also if something went wrong and we missed a payment suddenly it reverts to 20% interest.

I think for now we will continue to pay the loan for another 2 years as we get rid of our 11k cc debt, and then shift the balance at that point. But it's worth considering isn't it? I know when my mum offered to loan us money to pay off a loan we had at 14 odd % (what were we thinking?!?) at only 3% interest (because she's not a charity!!) we paid the same amount back but it reduced the loan term by a whole year!