Minimum Payments

cossie1990

Good morning all,

I'm just after a little bit of validation in my thought process and/or any other pitfalls/opportunities that I may be missing. I realise that this, in the grand scheme of this forum is fairly insignificant but still any advice would be appreciated.

I have a credit card with about £5.8k on it, it's at 0% until October 25. I've been paying £100 per month off on it and just chipping away, the plan was to just balance transfer once the 0% ended and continue paying it off with another provider.

Cash flow has been getting a little tighter over the last few months and I was thinking about reducing the payment to the minimum which I think is around £60 to give me an extra £40 per month for other uses in my day to day life just to ease some of the pressure. Then balance transfer and likely further balance transfer after that.

Realise this will add xx years onto the payback period but if I just view this as an additional layer of tax then I'm happy with it.

It goes against my morals as I generally want to pay back anything as fast as I can but I feel as though the cash flow will be an immediately better benefit for me.

Am I overthinking?

Thank you!

Grumpelstiltskin

Why not split the difference between £60 and £100 then you are still paying over the minimum and you have extra money in your budget.

fatbelly

Yes it's fine. But what is the extra £40 going on?

Why not post an soa and see if the folk here can make better suggestions?

https://www.lemonfool.co.uk/financecalculators/soa.php

Brie

I've always found have a set amount to pay makes life a bit easier so even when on a 0% BT I've picked an amount just above the intitial minimum.  So if it was £98, I'd pick £100 and set the DD to pay that.  When the minimum got lower, say £94, I could lower it to £95 if I felt that was needed.  I don't know what banks and card companies look at on peoples credit reports but it should be pretty easy for them to figure that an individual is ALWAYS paying just the minimum.  And that sends a certain message perhaps.  Paying a set amount for a number of months and then changing it to another set amount means you are actively managing your money.  

That said I agree with fatbelly that posting a SOA would be helpful and get your some solid advice.  

CliveOfIndia

cossie1990 said:

the plan was to just balance transfer once the 0% ended and continue paying it off with another provider.

Then balance transfer and likely further balance transfer after that.

The biggest danger here is, what happens if you find you're not eligible for any further BT offers?

The financial landscape in general is always fluctuating - one minute credit is easy to come by, the next minute lenders are tightening their belts left, right and centre.

For sure, there's probably a reasonable chance that you'll continue to be able to BT, but it's a dangerous gamble to just assume you'll be able to do so.

For that reason I'd urge you - as others have suggested - to fill out an SOA.  Relying on credit for the long term is not usually sustainable.

FluffyBabyPenguin

17 months at £100 pm is £1700
17 months at £60pm is £1020

It might feel quite nice to get your debt down to £4k by the time your 0% BT is up next year! If it were me I think I do whatever I could to find that £40 from elsewhere in my spending, or earn it somehow. However it is of course up to you and your current finances. 

Beware that 0% BTs may not always be available - I had many years where I just could not get them at all.  

pmartin86

As @fatbelly suggested, posting a SOA is probably your best bet - If your financed are so tight that £40 a month (9 quid a week...) is going to make any difference then you need to look at something a bit more drastic. This is not a judgement, I've been there, its hard to admit and its even harder to solve, but 9 quid a week...thats barely even a coffee and a muffin.

fatbelly

pmartin86 said:

As @fatbelly suggested, posting a SOA is probably your best bet - If your financed are so tight that £40 a month (9 quid a week...) is going to make any difference then you need to look at something a bit more drastic. This is not a judgement, I've been there, its hard to admit and its even harder to solve, but 9 quid a week...thats barely even a coffee and a muffin.

Just paid £9 for a magazine!

pmartin86

fatbelly said:

pmartin86 said:

As @fatbelly suggested, posting a SOA is probably your best bet - If your financed are so tight that £40 a month (9 quid a week...) is going to make any difference then you need to look at something a bit more drastic. This is not a judgement, I've been there, its hard to admit and its even harder to solve, but 9 quid a week...thats barely even a coffee and a muffin.

Just paid £9 for a magazine!

Oh please don't bring up trauma - I was out with thekids a couple of weeks ago and popped into a tesco for a few staples, the kids had been exceptionally well behaved (for once!) and wanted thos activity magazine things, i let them pick one each and didnt think to much of it till i paid, £8 and £6.50! I used to get the Beano for 40p when i was that age!

enthusiasticsaver

cossie1990 said:

Good morning all,

I'm just after a little bit of validation in my thought process and/or any other pitfalls/opportunities that I may be missing. I realise that this, in the grand scheme of this forum is fairly insignificant but still any advice would be appreciated.

I have a credit card with about £5.8k on it, it's at 0% until October 25. I've been paying £100 per month off on it and just chipping away, the plan was to just balance transfer once the 0% ended and continue paying it off with another provider.

Cash flow has been getting a little tighter over the last few months and I was thinking about reducing the payment to the minimum which I think is around £60 to give me an extra £40 per month for other uses in my day to day life just to ease some of the pressure. Then balance transfer and likely further balance transfer after that.

Realise this will add xx years onto the payback period but if I just view this as an additional layer of tax then I'm happy with it.

It goes against my morals as I generally want to pay back anything as fast as I can but I feel as th. ough the cash flow will be an immediately better benefit for me.

Am I overthinking?

Thank you!

It is always advisable to pay slightly over minimum as your credit record may be adversely affected if paying just minimums.  However if you have no other debt in the grand scheme of things it may not be an issue as long as you will be eligible for further BT deals and you do not mind paying the BT fee. I don't think there is anything wrong in carrying credit card debt if at 0% and manageable but it sounds for you like even a small amount of debt is becoming unmanageable if you are considering dropping your payment by just £40 a month to make things easier cashflow wise. 

I think more to the point why has your cashflow become tighter and is that likely to improve? £40 is a relatively small amount so if your budget is that tight you may want to look at where your money is going in case things get worse. Do you have savings?  What would you do if you have an unavoidable bill? If you have no option but to put that on to a credit card because your budget is so tight you do not have room to  save you can quickly spiral into a circle of debt where you are robbing Peter to pay Paul