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Which one first?

4 replies

tickktock · 21/08/2024 11:07

I have a credit card (£6500) interest free for 2 years
And a loan £8000 which is total and there will be interest (think over the term I'll pay back £8800 or something)

I want to start paying them off more frequently with money from side hustles, which one should I focus on first?

Or do I hit both at the same time? X

OP posts:
Rainbow1901 · 21/08/2024 11:16

I imagine that you will be paying minimal payments on the Credit card anyway so will be reducing that.
Martin Lewis would say to pay off the highest interest bearing loan which if you pay off sooner will reduce the interest overall anyway. Is there a penalty if you pay off the loan early? If so you may do better to save your payments and then pay off when you won't be penalised.

TheOneWithUnagi · 21/08/2024 11:28

Your credit card will be expensive when the 2 year interest free period is up so I'd be paying the minimum and ensuring you are saving at least £270 (6500/24 months) so you have that ready to pay off at the end of the period.
If you have more than that available and can repay the loan without penalty then that will save you interest overall.

tickktock · 21/08/2024 15:21

TheOneWithUnagi · 21/08/2024 11:28

Your credit card will be expensive when the 2 year interest free period is up so I'd be paying the minimum and ensuring you are saving at least £270 (6500/24 months) so you have that ready to pay off at the end of the period.
If you have more than that available and can repay the loan without penalty then that will save you interest overall.

That's a really good point about when the term is up - I've just done a balance transfer to a 0% and want it gone before I have to swap it again! X

OP posts:
tickktock · 21/08/2024 15:22

Rainbow1901 · 21/08/2024 11:16

I imagine that you will be paying minimal payments on the Credit card anyway so will be reducing that.
Martin Lewis would say to pay off the highest interest bearing loan which if you pay off sooner will reduce the interest overall anyway. Is there a penalty if you pay off the loan early? If so you may do better to save your payments and then pay off when you won't be penalised.

Yes I'll be paying £150 a month off my credit card I've said (unsure of what the minimum is)
I'm going to check that with the loan- I can't remember if there's a charge for completing early but I'm going to re read the fine details! X

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