Covid-19 Payment Holidays

sambaird

Hi All.
Hoping you can provide some advice/guidance.

I currently have 6 credit cards that I am carrying a balance on. The monthly minimum payments for all 6 comes to roughly £650 and I also make an overpayment of roughly £300pm - I’m using the snowball method, so this goes to the card with the lowest balance until it’s fully paid off.

All 6 of the cards are offering 3 month payment holidays.

I’m lucky that the job I have allows me to work from home, my monthly wage has not been reduced and job security is very high.

I was thinking that I could apply for the payment holiday on all 6 cards and use that £950 for 3 months to pay off in full one of the highest interest balance cards I have (roughly 3k) over the next 3 months.  Once the payment holidays expire, I’d then have at least 550pm to make overpayments going forward (the current minimum payment for the card I’d like to clear is roughly 250pm.

It kinda makes sense in my head when I set it out as above... but can anyone point out any downsides?
I am aware that interest is not suspended in the holidays, and minimum payments for each will go up in the short term once the holidays are over... but for me would this be manageable in the short term.

Thanks in advance.

D3xt3r5L4b

If you’re not affected why would you apply for the payment holidays?

alfred64

He is applying so that he can clear the highest interest card. The accumulated interest during the payment holiday will be less on the remaining cards than with it . Idea seems sound.

wizzywig27

Keep in mind, if you are up to your limit on any of the cards the interest will take you over your limit, thus affecting your credit file

msallen

As interest will still be accruing on all the cards the saving won't be as much as it first appears (it'll just be the difference in interest rate that you'll be saving) but it could still be worthwhile depending on the difference in interest rates.
I don't know whether you made a mistake in the wording of your question, but after you do this (if you do) then DON'T go back to overpaying the card with the lowest balance as at present, but to the card with the highest interest rate - same principle as your 3 month plan, but for a lot longer than 3 months - saving much more.