Pay off Credit card or loan?

notspending123

Hello!
I’m after some advice please ... I currently have 1 bank loan where I pay £235 back per month for 60 months. If I pay extra off my loan, I can use the payment to reduce the monthly amount or reduce the loan length (this option saves me money) .
But! I have 2 credit cards, both of which are on a 0% interest rate for another 12 months.
Do I, pay just over the minimum payment on each credit card and throw as much money as I can towards my loan (it would help me hugely to reduce my loan repayments as I would love a family in the near future so the less/ cheaper outgoings the better). And then before my 0% period ends on the cc’s, transfer them to another 0% card.
Or do I work on getting rid of the cc’s before the loan and snowball it?

Many thanks!!

Fosterdog

It depends on what the balances and minimum payments are on the cards, if you just pay the minimum for the next 12 months and stop using the cards will they be clear in time?
What rates will they go to if you can't get a balance transfer?
What is the rate on the loan?
Was the loan originally 60 months or currently 60 months, or recently taken out?
Also how much do have have available for overpayments?

Personally at least for now I would throw everything at the loan and re-evaluate in say 6-9 months where I'd start looking at either clearing the CCs or getting a balance transfer before the 0% runs out

notspending123

Hi, I have stopped using my cc’s but if I pay just over the minimum they won’t be clear in the 12 months.
The loan is 3.2% (from memory) and the cc will go up to over 19%.
I have a separate cc which I use and pay off in full every month to keep it ‘open’ (I only use it to keep it open) and they send me 0% BT offers monthly so I would be looking at switching to the 0% BT with a few months to spare.
I really like the idea of paying more towards my loan for the next 6months and then looking at re- evaluating the situation, thank you!

enthusiasticsaver

I would concentrate on the loan as that is charging interest. So just pay minimums on the credit cards and focus on clearing the loan. I think you definitely need to stop using the cards though as you seem to be getting yourself in a debt spiral. How much is on the loan and cards? Maybe post an soa up.

The only caveat to this is if you think you will struggle to get a BT deal in a years time as undoubtedly the credit cards will then be on a higher rate. It depends on balances too.

redux

If the loan is 3.2%, I wouldn't say rush to reduce it.

How about opening a couple of bank accounts (Nationwide, TSB) and a monthly regular saver (Nationwide) account paying 5% interest.

This would make slightly more than the loan is costing, and it hedges things by keeping you more flexible in a year's time, for example use the monthly saver to clear against the credit card balance when the 0% offer ends.