Credit card or loan

[Loveablers]

I have £2500 on a credit card. I also took out a loan 2 years ago and I have 6 repayments left, each at £360 per month.

I’ve saved £2000 in the last 6 weeks so I’m stuck on whether to - 1) pay off the loan now which will free up £360 a month, I can then put that towards paying off my credit card. Or 2) pay £2000 of my credit card and continue making the loan repayments each month.

What would you do?

Is your current credit card interest free? If not, I would get the balance transferred over to one that is and then pay off the loan with the £2k and pay the card off monthly.

The technique you describe (paying off a bill and using that money to pay off others), is called snowballing.
That technique recommends paying off the smallest bills first. It gives some people a sense of satisfaction and encouragement to continue.
Even if other bills have higher interest which presumably your managing so far anyway.
I personally like the satisfaction.

en.m.wikipedia.org/wiki/Debt-snowball_method

What is the interest like on the credit card?

Also what's the interest rate on the loan? If you pay the loan off early it will cost you slightly less than £360 x 6 so if the credit card is interest free, it's probably best to pay the loan off and then concentrate on the card.

You need to contact the loan provider for a settlement figure, which may be easier said than done right now as they will be on reduced staffing trying to deal with the influx of people needing payment holidays.

But if the loan is very cheap there's probably not a lot in it and you could always park your £2k in a nationwide current account if you don't already have one, and earn 5% interest, which could be more than either the loan or credit card.

I would pay off the loan , then use the £360 to clear credit card each month, clearing it in 5 months time with just £360.If you can make a payment on top, even quicker.

Least with the c/c if something happens like a car breakdown etc you can use the £360 towards that , whereas with a loan the figure is set.

If your credit card isn't interest free transfer the balance to an interest free credit card.
I'd personally pay off the loan and then if possible increase the payments on the credit card.

It has been difficult to get a zero interest credit for the last year or so. Worth trying, but don't count on it.
Is your job secure? Do you need a cushion of credit if you lose it?

Highest interest first!