Pay wage onto credit card and then spending

rmarma

I'm working down my credit card bill, have managed to balance transfer some of it at 0% and put some of it into a personal loan at a fairly good rate. As such for the same monthly payment which was barely chipping at the balance on the minimum amount I'm able to make some headway into paying off the debts.

The remainder of a little over £2k is left on my barclaycard @ 18.9%. I'm going to obviously make the biggest effort to pay off this amount first - but I don't have much extra money left over to do so.

Getting to the point...after my fixed outgoings I probably have £800/month for my day to day living costs most of which goes through my debit card at the supermarket etc.

Is it worth paying that money towards the credit card and then using the credit card for that day to day spending? My logic is that it'd bring the balance down to say £1200 and then the purchase themselves would have the 'up to 56 day' interest free period (although I'm not clear if that only applies if you clear the whole balance?)

Dobbibill

purchases will not get up to 56 days interest free unless the balance is paid in full the previous month.

however interest is calculated daily so the lower the balance the less interest on that day.

The risk is they reduce your limit and tie up a months wages leaving you up a proverbial creek.

rmarma

Thanks for the quick reply, that makes sense. So some potential saving with some potential risk.

FWIW I put last months statement into a spreadsheet and by my rough calculations the saving would have been around a tenner so debatable whether it'd be worth it or not.

I might try with half this month to test the water.

chattychappy

I'd look at the eligibility checker and see if you can get a further card. You could consider:

1) a 0% on purchases card. Put your new spend on this, only paying the minimums. This will free up cash flow to throw at your interest bearing Barclaycard debt.

2) Another 0% BT card to take your interest bearing debt.

Some cards offer a combination of the two. The advantage of a purchase card is that you won't pay a fee (you just spend normally) whereas with a BT card there is a hit of typically 3% on the transferred amount.

I wouldn't apply for more credit if you think it might encourage you into spending more. But the maths are simple: if you can get rid of the interest, you can get the debts reducing faster. I wouldn't worry about expiry of the 0% deals... even if you go onto standard interest, you will still be in a stronger position then than you are now because the debt on which you are incurring interest will be reduced. Besides, by then hopefully you would have paid off the debt anyway or at least be able to roll it over to another 0% deal.

Always pay £1 more than the minimum payment. This will avoid a "minimum payment" marker on the credit file. This *might* make it easier to get credit in the future, should you need it.