Loan or credit card ? What’s best to pay off first ?

HollyEstelle

hello ! Just wondered if anyone can help me with this one ! I want to pay a lump sum off my dept... I have a secured loan on my business premises and I also have two large credit cards, is it better to pay the lump sum off my secured loan which is around 6% interest or one of my large credit card, the credit card is, at the moment  3.4% until jan 2022 then I will have to move it around as the interest rate will go up.  Not sure which is the best one to pay the lump sum. If I paid the credit card it would give me a bit more money a month saving, than the secured loan..  any help or advice would be really appreciated ! Thank you 😊

colsten

Simple: pay off your most expensive debt first, and also check whether you can lower the cost of your remaining debt in the meantime https://www.moneysavingexpert.com/savings/pay-off-debts/#repayfirst

colsten

Also, you might find some extra hints and tips on the Debt Free Wannabe board

eskbanker

HollyEstelle said:

I want to pay a lump sum off my dept... I have a secured loan on my business premises and I also have two large credit cards

Are these personal debts or business debts, or a mixture?  Anything relating to the business ought to be considered separately from personal finances, given the entirely different tax regimes and other financial ramifications of debts, losses, etc....

HollyEstelle

Hi thank you for your reply , the loan is a business loan secured on the property and the credit cards are from personal use .. thanks 

eskbanker

HollyEstelle said:

Hi thank you for your reply , the loan is a business loan secured on the property and the credit cards are from personal use .. thanks 

Is this business set up as a limited company or sole trader/self-employed?  If the former then you must keep a clear distinction between business money/debts and your personal money/debts, but if the latter then it's more blurred - do you have access to accountancy and/or advisory services?

HollyEstelle

Hi the business is a partnership, the personal debts are separate  from the business, it’s only The loan that’s the business, I just don’t know what’s best to pay off first, a loan or credit cards,  we do have an accountant so maybe it’s best to ask him, thanks