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additional mortgage repayment or credit card

Discussion in 'Money Management' started by brookelea, 18th Mar, 2008.

  1. brookelea

    brookelea Member

    Joined:
    14th Jan, 2008
    Posts:
    10
    Location:
    Melbourne
    i'm adding an additional $500 a fortnight into my mortgage..
    am i better off putting that money into my credit card debt??

    any advice would be super :)

    thanks :)
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Location:
    Sydney, Australia
    Definitely - get rid of the credit card debt first ... the interest rate you are paying is probably twice as high as your mortgage - and will take less time to clear. Once you have cleared that debt, you will have even more money available to pour into your mortgage (should you wish to do so).

    I made some explanations about the maths involved in my article: How to Save Effectively
     
  3. brookelea

    brookelea Member

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    Location:
    Melbourne
    thanks sim :D
     
  4. nitro-nige

    nitro-nige Well-Known Member

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    8th Mar, 2007
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    Location:
    Reservoir, Melb
    Have you considered redrawing some money on your home loan to pay out the credit card debt?
    Assuming the fees aren't too high you could end up saving by paying less in interest. Run the numbers first though because paying high interest for a few months on the money may still be cheaper than paying lower interest for years on the mortgage.
     
  5. voigtstr

    voigtstr Well-Known Member

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    Hobart
    If you want to see quick progress, pay off the smallest debts first.
    If you want to save the most interest, pay off the highest interest debt first.
    My approach is to pay off the debt with highest repayment to debt ratio first, this helps cashflow the most.
     
  6. davo6253

    davo6253 Well-Known Member

    Joined:
    11th Jul, 2008
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    Location:
    Melbourne, Victoria
    Another option is to do a 0% balance transfer on the credit card to another banking or credit institution and using the interest free period to save on that debt. But definitely always pay the highest interest rate down first, if not wipe out the higher rate entirely :)