Debt advice

Dippygoose

Got myself into a little bit of mess with credit card debt I owe.

£2890 on a Lloyds card to be paid by October

1300 on a NatWest card to be paid by September

I will have raised £1500 by the end of April currently working lots of overtime to raise the money and will be able to pay £300 a month no overtime assisted after April making £3000.

I was planning to do pay off the biggest which is the Lloyd which would hit me for the most interest and do a balance transfer or small loan for the NatWest which I’d be able to pay off in January with pay from that month’s double payday as I get paid 13 times a year instead of 12 and that is the double.

Was also looking at doing another bank account switched to get the £200 incentive from Santander.

is this a good plan? I would appreciate advice.

Brie

Sorry I can't quite understand your numbers.

You owe £4190 (2890+1300) and you will have £4500 (1500+3000) so why is there a problem? Obviously I've missed something so I'll ignore that.

I assume that as you say that cards need to be paid by a certain month that they are currently on a 0% deal. And hope that you aren't using either for day to day spending.

As to which you should pay off first how likely to you think NatWest will be to give you another 0% BT before October? It may be more likely if you paid that first, maybe by the end of July with your £1500.

You say that Lloyds would hit you with more interest - is that due to a higher interest rate or simply the higher amount owed?

Dippygoose

https://forums.moneysavingexpert.com/discussion/comment/81928207#Comment_81928207

the one card with the most was over a longer interest free period so I would be hit with more interest from over a longer period.

The aim was to pay the biggest amount of completely and do some type of balance transfer for the rest giving me a little longer to pay for it.

my numbers would be £1500 from have earned by the end of April and the other £1500 is the amount I would’ve paid off before the interest free period expires excluding the April 15 £3000 if I don’t do any more overtime.

1500+1500 = 3000

Brie

ok so I'll go back to the other idea

how likely to you think NatWest will be to give you another 0% BT before October? It may be more likely if you paid that first, maybe by the end of July with your £1500.

and this still doesn't make sense

the one card with the most was over a longer interest free period so I would be hit with more interest from over a longer period.

Why would you be hit with more interest? You are only charged on the balance remaining so you should look at the interest rates they will use, not how much the balance is on individual cards. £4190 - 3000 is £1190 no matter which card it is on. If the NW card will charge you 29% and the Lloyds 24% you should pay off the NW card first.

And don't forget that having paid one card off you have the DD money available to put on the remaining card which will clear it quicker than you're doing now.

Dippygoose

https://forums.moneysavingexpert.com/discussion/comment/81928307#Comment_81928307

sorry I misunderstood. I thought I’d pay interest on the whole balance from the start not the remaining as part of the Lloyds was a balance of transfer and some spending roughly £1200 was the balance transfer this needs to be paid in August and the Spending needs to be paid in October.

GrumpyDil

No, when you are on an offer you only get charged interest from the date the offer expires and I believe under the new rules the expectation is that money paid should be applied against the offering expiring earliest.

So as Brie says if you have to leave anything accruing interest you want that to be on the lowest interest rate.

Dippygoose

https://forums.moneysavingexpert.com/discussion/comment/81928420#Comment_81928420

thank you very much and I definitely want to pay the Lloyds off first because it has the highest interest .

Brie

So the Lloyds has both spending and a balance transfer? OK so every payment you are making is going towards the spending and interest that is added each month. T&Cs for all credit cards (as I understand it) is that any money paid goes on the portion of the debt that attracts the highest interest. What's worse is that since you aren't clearing the balance in full every month then any purchases made attract interest from the day of the purchase. So sounds like you are right in needing to clear the Lloyds asap. Or at least the amount that has purchases. And stop using it to buy things. Same would apply to NatWest.

So if you do want to keep using a card to buy stuff then consider what will work best for you. Could you use your £1500 to clear the purchases and interest on the Lloyds card asap? And get that down so it's only the BT on there. Or as I said clear the NatWest and hope for another BT offer and transfer as much as possible from the Lloyds card to the NW one. But that will likely take a couple of months at least, if at all.

What does your credit history show? Any problems? How likely would you be to get another card? Maybe all you need is one with a high enough limit to put your day to day purchases on so you can better clear the other two. Or get one with a 0% BT offer sooner rather than later and start shifting the money off the Lloyds to stop it having interest already. You talk about getting a loan or a BT in the future so I'm assuming this might be possible.

Certainly try to pay more than the minimum on both cards each month. I believe that the credit checking robots that the banks use can easily tell if you are only ever paying the minimum. One clue would be that the DD goes down ever so slightly each month as it's a % of the statement total. What made clearing debt easier for me to maintain was to set DD payments at a specific amount rather than a percentage. So say the minimum this month was £89. Set the payment instead to £90. And leave it at that. It make your accounting easier as you know precisely what it will be. Maybe as the minimum required decreases to £84 you can decrease the set amount to £85. And leave it at that for a couple/few months. You won't notice the small difference in the payment but your card accounts will. Because you aren't just paying the absolute minimum you have to you will be more likely to get other offers popping up or will be more likely to get accepted if you decide you need another card for whatever reason.

Hope that makes sense. It does in my brain but we're all wired differently so it may not to you. Ask me more if you need to.

Dippygoose

Their is zero interest on both as it was a promotional rate and credit rating is fair with zero problems never missed a payment in my life.

my Lloyds card keeps offering me balance transfers at 0% for 15 months at 5% transfer fee the plan was to try to clear the card and transfer the one to the Lloyds to give me extra time.

i’ve also learned I’ll be getting a pay raise which gives me an extra £75 a month to put it.

but with enough overtimeI might be able to clear both without needing a balance

https://forums.moneysavingexpert.com/discussion/comment/81928748#Comment_81928748

in_need_of_direction

I’d say you seem to have a way forward to clear both without a balance transfer. I’d see no reason not to do an account switch and put the bonus in savings to build in some leeway. It might also be worth looking to see if any regular commitments can be reduced.