Advice Please

Piperk

I have the following:

- £9,058 at MBNA 0% interest for 48 months from July 2021 - I pay £580 per month on this 

- £5,265 with Barclaycard 26% interest - I pay £290 a month on this. 

My fixed mortgage runs out in December 2023.

I have around £9000 in premium bonds.

I have a couple of concerns - I want a good credit rating / minimal debt when I come to remortgage. Should I apply for a balance transfer for my Barclaycard? Should I pay off as much as I can using my premium bonds? 

Any advice would be hugely appreciated. I earn a very decent wage and am truly annoyed I have found myself in this situation! 

Thank you!

martinbainbridge1975

options to maybe consider are balance transfer the 26% card to another card, if you cant get the required limit or deal either pay off with premium bonds or flip the payment amounts around and pay more off the higher rate card.

Piperk

Thank you - and do you think try to have them paid off in full maybe three months before remortgage so credit file has a chance to catch up? 

SuperAllyB

I'd definitely only be paying minimum on MBNA if I was being charged 26% on my other card.  Some say slightly more than minimum to avoid a minimum payment marker but I've never done so and was always able to get a new BT card when needed.

Piperk

Ok cool - só best idea would be to transfer to zero balance if possible! 

[Deleted User]

Might be an option to flog the premium bonds, the small chance of winning any sort of decent prize is hugely offset by the interest you are paying on the Barclaycard. Otherwise yes try and get a BT card and move whatever you can onto that.

Agree with the above though, paying £580 a month on a card with 4 years (really?) 0% is bonkers, you'll have cleared the debt in 16 months which is a waste of the offer. Pay £275 a month on it and you'll still clear it by the end of the offer and can chuck £305 a month more at the one with the debt and you'll clear that in around 10 months or so with allowance for interest

MEM62

Piperk said:

I have the following:

- £9,058 at MBNA 0% interest for 48 months from July 2021 - I pay £580 per month on this 

- £5,265 with Barclaycard 26% interest - I pay £290 a month on this. 

I am struggling to see why you are paying £580 per month off a debt that is costing you nothing in interest whilst only paying £290 off a debt that is costing you 29%.  Surely you should pay just over the minimum payment on the MBNA card and throw everything else at the Barclaycard.  In your position I might even be tempted to clear it from savings and replenish your savings with the £290 you were paying off the Barclaycard.      

Piperk

Thank you everyone - this is really helpful. Do you think it’s important to clear them before I remortgage which is due in December? Lots of questions I know! 

Ebe_Scrooge

Piperk said:

Thank you everyone - this is really helpful. Do you think it’s important to clear them before I remortgage which is due in December? Lots of questions I know! 

"Important" ?  Who can say?  When you come to apply for a mortgage, one factor (amongst many) that will be taken into consideration is your existing debt.  Now, if your existing debt is small in relation to your income, and you are servicing it with no problems, it arguably won't make much of a difference to your chances of getting a decent rate.

However, if you are able to clear the debts completely, this will put you in an even better position.  Shifting the BC debt to a 0% card (if you're able to do so) will obviously save you money in interest, but it won't affect the total amount you owe - which is what the mortgage lender will be looking at.

If it were me, I'd cash in some of your premium bonds and clear the BC debt completely - that's got to be a win-win, whichever way you look at it.  Then you can, if you wish, just buy more premium bonds every month to replenish your savings.

Piperk

Thank you so much everyone 😀😀

born_again

Piperk said:

Thank you - and do you think try to have them paid off in full maybe three months before remortgage so credit file has a chance to catch up? 

Forget about credit file. It is Credit history lenders look at. 👍