Which credit card to pay a lump sum to??

MovingForwards

Octagon said:

Ps - you might need to make sure NatWest will deduct off of the interest bearing portion of the balance as the first priority.

I think there was legislation/FCA whatnot to say they have to do that these days… Anyone know?

NW do clear the highest interest element first on the balance.

eskbanker

Octagon said:

Ps - you might need to make sure NatWest will deduct off of the interest bearing portion of the balance as the first priority.

I think there was legislation/FCA whatnot to say they have to do that these days… Anyone know?

Yes, it's specified in the FCA handbook at CONC 6.7.4 and has been since at least 2014:

Credit card and retail revolving credit requirements

A firm must first allocate a repayment to the debt subject to the highest rate of interest (and then to the next highest rate of interest and so on) for:

1. the outstanding balance on a credit card; [...]

[Deleted User]

Payments always go to highest rate statemented debt.

redux

Some replies are saying psy off the Sainsburys first, then send more to the other card.

This makes no sense, given that it's interest free until the middle of next year.

As per the first couple of replies, pay ~£2250 to the Nat West to clear the interest bearing portion, hold the rest to cover the next few months' payments on both,and start making plans to cover the rest of this by the time interest starts being charged.

RobHT

SumacRoastedStrawberries said:

Hello, 

I racked up some debt on two credit cards while on mat leave and over the past 18 months or so. I was recently given £3000 cash by a relative.

I'm on a reduced income having gone back to work part time and the monthly payments take a real chunk out of my budget each month (as well as bloody nursery fees).

I wondered if you clever people could help me to understand which card should I pay the £3k to (or maybe a bit to both?) to reduce my monthly payments the most? 

Card 1 - Sainsburys 

Balance - £2865 

This was a Balance transfer and is on a 0% rate until June 2023 

Minimum payment is £64.47 I currently pay £70 p/m to this card 

Card 2 - Natwest 

Balance - £5304

Of which £3052 is on a 0% Balance transfer until May 2022, and £2,252 is at an annual rate of 18.276%

Minimum payment is £78.45 and that's what I am paying at the moment. 

My instinct is to get rid of the Sainsburys card completely as my budget is literally break even even the penny at the minute and another £70 a month would give me huge breathing room. However I think the clever thing to do might be to pay the vast majority of the money to the Natwest card and get rid of thr Purchases amount which is costing me interest? 

Thanks so much for any advice, please let me know if I've missed any info.

I jump in this thread for pure curiosity.
Your salary should be around 100k for a credit card of 5.3k, is it right?
I assume that this is not your total amount of balance available, but if it is, please let me know, I'm just curious to understand how banks allocate the credit, between me and one of my friends there is a huge discrepancy, even having pretty much the same salary.

[Deleted User]

RobHT said:

SumacRoastedStrawberries said:

Hello, 

I racked up some debt on two credit cards while on mat leave and over the past 18 months or so. I was recently given £3000 cash by a relative.

I'm on a reduced income having gone back to work part time and the monthly payments take a real chunk out of my budget each month (as well as bloody nursery fees).

I wondered if you clever people could help me to understand which card should I pay the £3k to (or maybe a bit to both?) to reduce my monthly payments the most? 

Card 1 - Sainsburys 

Balance - £2865 

This was a Balance transfer and is on a 0% rate until June 2023 

Minimum payment is £64.47 I currently pay £70 p/m to this card 

Card 2 - Natwest 

Balance - £5304

Of which £3052 is on a 0% Balance transfer until May 2022, and £2,252 is at an annual rate of 18.276%

Minimum payment is £78.45 and that's what I am paying at the moment. 

My instinct is to get rid of the Sainsburys card completely as my budget is literally break even even the penny at the minute and another £70 a month would give me huge breathing room. However I think the clever thing to do might be to pay the vast majority of the money to the Natwest card and get rid of thr Purchases amount which is costing me interest? 

Thanks so much for any advice, please let me know if I've missed any info.

Your salary should be around 100k for a credit card of 5.3k, is it right?

No.  You could have that balance on any salary. Even zero, if your income has changed.

Lenders set limits based on risk, of which income is only one factor.

Sncjw

RobHT said:

SumacRoastedStrawberries said:

Hello, 

I racked up some debt on two credit cards while on mat leave and over the past 18 months or so. I was recently given £3000 cash by a relative.

I'm on a reduced income having gone back to work part time and the monthly payments take a real chunk out of my budget each month (as well as bloody nursery fees).

I wondered if you clever people could help me to understand which card should I pay the £3k to (or maybe a bit to both?) to reduce my monthly payments the most? 

Card 1 - Sainsburys 

Balance - £2865 

This was a Balance transfer and is on a 0% rate until June 2023 

Minimum payment is £64.47 I currently pay £70 p/m to this card 

Card 2 - Natwest 

Balance - £5304

Of which £3052 is on a 0% Balance transfer until May 2022, and £2,252 is at an annual rate of 18.276%

Minimum payment is £78.45 and that's what I am paying at the moment. 

My instinct is to get rid of the Sainsburys card completely as my budget is literally break even even the penny at the minute and another £70 a month would give me huge breathing room. However I think the clever thing to do might be to pay the vast majority of the money to the Natwest card and get rid of thr Purchases amount which is costing me interest? 

Thanks so much for any advice, please let me know if I've missed any info.

I jump in this thread for pure curiosity.
Your salary should be around 100k for a credit card of 5.3k, is it right?
I assume that this is not your total amount of balance available, but if it is, please let me know, I'm just curious to understand how banks allocate the credit, between me and one of my friends there is a huge discrepancy, even having pretty much the same salary.

Where did you get that figure from? 

molerat

RobHT said:

I jump in this thread for pure curiosity.
Your salary should be around 100k for a credit card of 5.3k, is it right?
I assume that this is not your total amount of balance available, but if it is, please let me know, I'm just curious to understand how banks allocate the credit, between me and one of my friends there is a huge discrepancy, even having pretty much the same salary.

On that basis I must be on around £600K !

RobHT

Sncjw said:

RobHT said:

SumacRoastedStrawberries said:

Hello, 

I racked up some debt on two credit cards while on mat leave and over the past 18 months or so. I was recently given £3000 cash by a relative.

I'm on a reduced income having gone back to work part time and the monthly payments take a real chunk out of my budget each month (as well as bloody nursery fees).

I wondered if you clever people could help me to understand which card should I pay the £3k to (or maybe a bit to both?) to reduce my monthly payments the most? 

Card 1 - Sainsburys 

Balance - £2865 

This was a Balance transfer and is on a 0% rate until June 2023 

Minimum payment is £64.47 I currently pay £70 p/m to this card 

Card 2 - Natwest 

Balance - £5304

Of which £3052 is on a 0% Balance transfer until May 2022, and £2,252 is at an annual rate of 18.276%

Minimum payment is £78.45 and that's what I am paying at the moment. 

My instinct is to get rid of the Sainsburys card completely as my budget is literally break even even the penny at the minute and another £70 a month would give me huge breathing room. However I think the clever thing to do might be to pay the vast majority of the money to the Natwest card and get rid of thr Purchases amount which is costing me interest? 

Thanks so much for any advice, please let me know if I've missed any info.

I jump in this thread for pure curiosity.
Your salary should be around 100k for a credit card of 5.3k, is it right?
I assume that this is not your total amount of balance available, but if it is, please let me know, I'm just curious to understand how banks allocate the credit, between me and one of my friends there is a huge discrepancy, even having pretty much the same salary.

Where did you get that figure from? 

Just experience, but don't tell me that someone with 100k (example) will receive 30k balance .
There is correlation with the salary and that's quite strong.
If you want long term credit, that can be a loan, not a credit card, the credit card issuer expects you to pay asap, even though it's offered as a benefit to repay in more than 24 months.

Jami74

RobHT said:

Just experience, but don't tell me that someone with 100k (example) will receive 30k balance .
There is correlation with the salary and that's quite strong.
If you want long term credit, that can be a loan, not a credit card, the credit card issuer expects you to pay asap, even though it's offered as a benefit to repay in more than 24 months.

My available credit across all my credit cards is about 50% of my gross annual salary with my biggest limit being 25% of my gross annual salary. There was a thread a while ago where people compared their credit limits with their salaries and it didn't seem there was any correlation.