Using credit cards to pay of debts

steffg60

Hi Guys

I am a approx £19500 in debt im not really worried about it as I have assets I could sell to pay off no problem but I'd like to use credit cards to help me pay this debt off. Here's what I owe out

£2056 to Lloydstsb credit card 15.9%Apr outstandding
I have just balanced transfered £13k from an MBNA card which is intrest free until feb09(with 3% BT fee) to a 6.4%AER internet saver, although I will only have £10k in the Savings as I have spent £3k on the house.

On top of this I also have a Loan which I owe £14400 on but I have £6k of this money in a different savings account and hoping to sell my car this week for £7000 which would almost clear the loan.
My monthly repayments on the loan are £388 a month and it has 3 years to run.
Would it be worth me clearing this loan straight away which would give me £388 extra a month and would save approx £1400 in intrest charges on the loan. But I would have to take some money from the Internet saver as there would be a £1400 shortfall. Thus making less on on my Stooz.

My plan would be as follows
Sell car and borrow £1400 from my balance transfer to pay of £14400 loan
Balance transfer addinaol £5k from the Mbna card to my Internet saver
Balance transfer £4k from the Tescos card to my Internet saver
Pay miniumim payments from the money I am saving from paying the loan (£388)
Transfer anything left over from the £388 after paying the minium payment on both cards into the Internet saver.
At the end of the balance transfer offer ending get another card and and do another balance transfer until eventually I have paid off the debt with the intrest I am making from the Internet saver account.

Hope this makes sence as I'm starting to make a mess of this and don't want to end up lossing money. Any pointers are appreciated I'm new to this kind of thing

dylanuk

Hi,

I think one of Martin's golden rules is there's no point in stoozing unless you're debt free.

The interest you'll be paying on your loan will likely outweigh any money you could earn on the cash in a savings account - so you should definitely get this repaid as soon as you can.

You should also repay the £2k on the Lloyds TSB card - which, at 15.9% APR is going to swamp any money made from leaving the cash in savings.

With regards switching between 0% balance transfer deals until your savings account has made enough from stoozing to repay it - you're going to have to get through a lot of 0% deals to earn enough in interest to repay £18,000!

I'd first focus on getting your loan and any interest charging debts / credit cards repaid.

You should also be very careful about spending money at 0% and expecting to be able to stooze off the remaining - the idea with stoozing is to keep ALL of the 0% debt in savings so it's there if you need to repay the credit card - at the end of the 0% period, or if you're unable to get another 0% balance transfer deal.

You can't expect the interest made from savings to cover the shortfall from spending some of the 0% debt. For one, your transfer fee to another 0% balance transfer credit card may work out more than you're making in savings - as you have less in the savings account than being moved between 0% credit cards.

If when you're interest charged debts are repaid you are able to save a fair amount each month to cover the shortfall between the amount in savings and the amount borrowed at 0% - then that's perhaps not too bad, but you really need to get the balance up quickly, or any money you've made will be wiped out on your next 0% transfer.

steffg60

Thanks for this advise so I think my Plan will be clear the Loan ASAP and clear then use the balance transfer to clear any other debts then use the money I'm saving from the loan to pay the balance transfer off.

dylanuk

Hi again,

Yes - that does sound a lot more streamlined!

Good luck with it, when you've got all those debts repaid it will be a lot simpler - and more profitable - to stooze.

When all your interest chargeable debts are cleared, you can put the money you're saving from servicing those debts into the savings account, but think of it like paying off the 0% debt by putting it into the savings.

This way, you will make a bit of money back from the interest - but you'll also be saving up the cash to repay the 0% debt if / when you need to.