Am I missing something ...

MikeyPGT

I have 2 credit cards - one with £2700 of debt and the other with £3750 (credit limit £4000, interest rate 18.5%).  The £2700 is a long standing debt and has just become a no interest no fee account as long as I meet minimum repayments they have said this will not affect my credit score.  My plan is to continue to pay the minimum (plus a few extra quid to round it up) and to pay £250 - £275 a month into the other account. 

However, I am short of 5 years on NIC (pension payable from June 2027) not working or likely to be.  My current plan is to use the 18.5% interest account to pay for the missing years (via Curve which apparently enables payment to HMRC for a 1.5% fee) in 5 x 5 monthly instalments.  I appreciate that this will increase the payback time for the extra pension but am banking on  making it past 75 in some shape ...

Aim would be to pay off the 18.5% credit card by the end of 2027.

Can anyone see any fatal flaws in my logic?  I am currently in receipt of a NHS pension and a basic rate tax payer. 

TheSpectator

How much is it to buy the missing years and how much extra pension will it get you? Have you actually confirmed with HMRC that you can fill the missing years?

Did you take the advice on the other thread to set up a direct debit to pay Class 3 this year and next?

MikeyPGT

TheSpectator said:

How much is it to buy the missing years and how much extra pension will it get you? Have you actually confirmed with HMRC that you can fill the missing years?

Did you take the advice on the other thread to set up a direct debit to pay Class 3 this year and next?

£907.40 for 2023/24 - £923 for the other 3 which takes me up to a forecast of £230.23 (but I think assumes that I will have contributed in 2024/25 - estimate up to April 2024 is £203.91) ...  Haven't looked into DD - will do so and try to balance that against paying down the Credit card balance.

Brie

I can't see how this will work.  You're pretty much maxed on your cards but want to use the credit on them to "buy" something.  If there's no credit available it won't work.  

And I don't think that you can buy NI contributions using a credit card in any case.  (I may be wrong)  And when you do buy I believe you have to buy the entire year in one go.  So potentially you're looking at paying off some of the card that is actually working (the £2700 one probably has no credit available on it no matter how much you debt you clear).  Then you'd need to get a cash advance at a very high interest rate (28%, 35%?) which you would then have to work even harder to clear.  

If there's any leeway to do anything I'd say get a new card with a 0% balance offer on it and transfer ££ from the usable card, take the cash advance and then do another 0% transfer to clear that.  It might work.  But it's pretty dangerous in my opinion.  

MikeyPGT

Brie said:

I can't see how this will work.  You're pretty much maxed on your cards but want to use the credit on them to "buy" something.  If there's no credit available it won't work.  

The plan is to pay off £250 - £275 a month from the £3750 debt for 4 - 5 months to cover the c £1000 payment to HMRC.  So by October the debt will have reduced to around £2750 and then rise again to £3750 following the payment to HMRC.  The interest rate on that card is 18.4%.

And I don't think that you can buy NI contributions using a credit card in any case.  (I may be wrong)  And when you do buy I believe you have to buy the entire year in one go.  So potentially you're looking at paying off some of the card that is actually working (the £2700 one probably has no credit available on it no matter how much you debt you clear).  Then you'd need to get a cash advance at a very high interest rate (28%, 35%?) which you would then have to work even harder to clear.  

Payment via Curve is apparently acceptable to HMRC as it is a debit card - albeit funded by a credit card!  From my understanding a payment from the credit card via Curve counts as a purchase rather than a cash advance with a one off 1.5% fee to Curve.  I would be buying a year's worth of contributions - hence the cost of c. £1000.  The £2700 card is frozen and is essentially a 0% debt so long as I maintain the minimum payments.

If there's any leeway to do anything I'd say get a new card with a 0% balance offer on it and transfer ££ from the usable card, take the cash advance and then do another 0% transfer to clear that.  It might work.  But it's pretty dangerous in my opinion.  

According to Martin's criteria I'm in the 30% bracket for a 0% card but as the £2700 is already at 0% indefinitely (as long as minimum payments are met) I can't really see the point.  I have thought about a loan to cover the NI Contributions but again is unlikely to be granted 

I think it is feasible and affordable and should be achievable unless I am missing something really obvious 

TheSpectator

It might make sense but you need to do some more number crunching. Factor in the interest and the fact you will lose 20% of any increase in state pension to taxation (20% assumes no increase to basic rate tax) and does the maths work?