Credit card or Loan?

m1m25

Hi everyone,
I'm in a bit of a dilemma not sure what to do. 
I have £7k savings i was planning to make a £7k over payment to NatWest loan to reduce the term by 1 year and save around £1000 in interest
but i'm struggling to get any 0% BT card for my santander credit card which has 6 months interest free remaining which is maxed out.
What would you do?
advice greatly appreciated. 
My current debts
Natwest Loan £20,000 Over 3 years @ 11.40%      Balance Remaining £15,685.00  2 years left in Feb
Santander credit card 0% for 18 months Purchases. 0% ends in may 2021     Limit £6500 Current balance £6300
Creation (currys) Limit £1500:  £550 BNPL 6 months 0% ends April 2021
Paypal Credit Limit £800:   Available to spend £500
Hitachi Retail Finance over 4 years:  Balance Remaining £1200  0% 3 years left 

born_again

Is the Natwest loan secured?

At the moment even while saving rates are low and it is % wise the best thing to do in paying off the highest interest rate. 
Is the £7K the only savings you have, or will you still have a safety buffer in case you lose your job etc?

[Deleted User]

Pay a sum off the NatWest loan as it's the highest rate.

You may find your reduced indebtedness then opens up other opportunities to refinance. But even it not, you'll be able to clear the NatWest loan more quickly due to the lower interest accumulating.

Keep an eye on the go to rates on the cards as they get towards the end of the promo period. At some point, you'll need to shift your focus.

msallen

You have to consider the "go to" interest rates and how much debt will be left on the 0% deals when they expire. If for example you look like still owing £5K on the Santander card in May and it is a lot higher APR than the loan (which I'm sure it will be) then its likely that you would be better off using £5K of the money for that unless you plan to transfer it to a 0% BT card ... and are confident of getting one, which is by no means a given at present. 

yksi

You took out a large NatWest loan after you took on the 0% transfer with Santander (or ran up the £6300 on there). This would explain your surprise at not finding any 0% transfer deals because there used to be no problem finding them. The lenders are not offering you more deals because they now consider you overcommitted, that is, you owe too much money and don't think it's a good risk to give you any more access to credit just now.

I'm in the same situation with almost identical amounts concerned, except that my 0% doesn't run out quite so fast. You will probably see that your credit-worthiness slowly creeps up each month as long as you are keeping on top of payments for everything. But there is still no guarantee of any transfer offer in May. I would check all your own bank(s) first to see if they have any transfer offers for you as they generally don't even credit check you with CRAs and you might be surprised what they offer (and keep looking each month). Put £1k onto the loan now because either way you don't need it in your hands. But hang onto the other £6k until you know for sure whether you can transfer the balance on the card.

born_again

With no details of your income & £20K + debt it may be time to do a statement of affairs and check out the debt board.

m1m25

born again 
Thanks for your reply, 
The loan is unsecured.
7k is all i've got in savings, i'm self employed so i can't lose my job but my income has been affected due to Covid19.
I can't bank on work picking up enough to repay £6k by may.
eligibility checker only offering me a fluid BT card right now. however I'm 75% sure if i put 7k towards the loan by April i would be eligible for more BT cards but its risky.

Jami74

m1m25 said:

I have £7k savings 
My current debts
Natwest Loan £20,000 Over 3 years @ 11.40%      Balance Remaining £15,685.00  2 years left in Feb
Santander credit card 0% for 18 months Purchases. 0% ends in may 2021     Limit £6500 Current balance £6300
Creation (currys) Limit £1500:  £550 BNPL 6 months 0% ends April 2021
Paypal Credit Limit £800:   Available to spend £500
Hitachi Retail Finance over 4 years:  Balance Remaining £1200  0% 3 years left 

Is the £7k as a result of putting an amount aside every month (as opposed to a windfall)? If so, could you use that amount against one of the debts instead? 
Were the purchases one-offs or are you planning to still use the credit cards and Paypal?
Have you got Christmas covered? Extra expenses over December/January already accounted for?

Personally, I'd keep the loan as it is. If you pay £7k off it and your financial life goes well then in February 2022 you'll be really chuffed. But if things don't go so well and you need money, you might not be able to increase your loan or get another at the same rate. It might feel like you just gave away £7k for nothing as the loan payments would not reduce in the short term, especially if you end up paying for another more expensive line of credit in addition.
Even though it might not look like the most moneysaving on paper (or screen) I would pay off the Paypal £300 and the Creation £550. It gets rid of them so no risk of not being able to pay them when the 0% ends and getting hit with high interest.. Assuming you have a steady income that covers your outgoings, I would then pay £5K off the Santander credit card and make a plan to overpay it each month to get it gone by May. If its not gone it'll be easier to get a balance transfer for the smaller amount.

Keep £1k in savings. I know there's no interest rates but if you need to make a purchase it saves you having to get credit for it.