Finance vs credit card(s)

stinabean

Hi all

Just sorting out exactly where we stand as I'm due to go on maternity leave very soon and all looks fine and we should, fingers crossed, have everything covered.

However we do have 2 finance agreements for our Sofa and Boiler - all were required when we bought our house recently.
These total at a monthly payment of £183 a month between the two of us.

I was wondering, for the sake of having the extra £ available whilst I'm on SMP, if it was worth paying these off with a credit card - would the minimum payment to pay the card likely be cheaper than the two agreements separately?

Thanks for any help/advice - just wanting to weigh up my options to make life easier the next few months

National_Debtline

Hi Stinabean,


You need to look at things like this very carefully. The agreements will likely have some kind of interest included in them already, so if you did use a credit card to pay these off you will then you would pay more interest overall. You could look at 0% interest cards, but that will only be for a set period of time and if you cannot clear the balance within the interest free period, you will, again, have an issue of repaying more.


You also need to check how much the minimum payments on the credit card would be. The best way to do this would be to check the terms and conditions of the credit card agreement (but a very rough guide would be around 2-4% of the balance).


Try and do a SOA based on your SMP income to check how affordable these are. If you cannot maintain them then you could consider renegotiating with these debts directly to pay what you can rather than refinancing. There are a lot of things to consider in this process - the first being the types of agreement. If the sofa is subject to hire purchase then you can't do this as failure to make the full payments can mean the goods are repossessed (it is extremely improbable the boiler is subject to hire purchase but do double check the agreement).


Laura
@natdebtline