Help needed in my concerted effort to get debt free!

Dumbledore55 · 9 April 2005 at 10:35AM

I finally got accepted for the Capital One 18 month 0% deal, the card has arrived and I got £13400 credit limit. This has taken an enormous weight off my shoulders as I had 3 cards all due to stop their 0% offers in the next 2/3 months. I was getting worried because Abbey had turned me down for a credit card despite me having my mortgage with them stating my credit rating wasn't good enough!! It would have crippled me to pay interest on those cards and I didn't want to keep applying for cards due to Abbeys comments about my credit rating.

So today I've transferred as much as I can to Capital One and I'm going to make a concerted effort to get rid of my debts once and for all. I have already cut up and sent back all the cards I didn't need anymore and whose interest rates are greater than 12.9% which I have with NSPCC.

My situation now looks like this:

Capital One - £13160 - 0% until August 06 (£13400 limit)
Lloyds TSB - £3026 - 0% until 1st June 05 then 16.9% (£3500 limit)
NSPCC - £284 - 0% until 26th May 05 then 12.9% (£9300 limit)
Sainsburys Visa - £4540 - 6.9% for life of balance but won't accept any more BTs at that rate (6650 limit) 20.9% for any other BTs

Capital One will accept new BTs at 0% throughout the 18 months - when I get some available credit of course!

Including minimum payments I have about £1000 per month I can dedicate to paying off my cards. Minimum payments are:

Capital One - £394.80
Lloyds TSB - £60.52
NSPCC - £5.68
Sainsburys Visa - £136.20

Can anyone advise me of the best way/order to start paying off these?

Justin_Credit · 9 April 2005 at 12:21PM

Hi Dumbledore55

I am by no means an expert but it seems to me that the Lloyds TSB debt is the most pressing at the moment as it will soon revert to 16.9%.

With that in mind I would concentrate on paying the minumum to the others which will leave you £463 per month to throw at the Lloyds TSB to drive it down as much as possible before the 16.9 kicks in. Then carry on until it is paid off unless you can find any more 0% deals.

The NSPCC card could then be paid off one month as that for me would be an annoyance and the current debt would be costing you about £36 per year.

You don't mention what the APR reverts to after the 18 month period with Capital One but this will probably be your next priority I would think, as whatever the rate, the actual interest will be quite considerable as it is a fairly large sum.

The Sainsbury's debt, for me would be the least pressing but continue with the snowballing principle, keep throwing the £1000 every month at your debts, generally paying off those with the highest APR's first.

I hope this is of some help but as I said I am no expert and there are plenty on here who are, who may be along soon to offer their advice.

Regards

JC

Dumbledore55 · 9 April 2005 at 12:25PM

Thanks Justin

The Capital One reverts to 14.9% after the 18 months.

Is it worth transferring what's left on Lloyds TSB to the NSPCC 12.9% when the interest rate kicks in?

DD

Magentasue · 9 April 2005 at 2:19PM

I'm not an expert either but I have seen this site mentioned:

https://www.whatsthecost.com

I think you need to look at snowballing. It seems sensible to pay as much as you can to the debt with the highest interest and then when that's paid off, allocate the money to the one with the next highest rate until D Day (Debtfree Day)!

Justin_Credit · 9 April 2005 at 2:51PM

Yes Dumbledore55, I hadn't thought of that, any saving is worth having so long as the cost of BT fees, if there are any, don't negate the savings involved.

Maybe by the time your 18 month 0% limit is up on Capital One you could shuffle what remains of that debt onto another 0% deal giving you the chance to pay it off.

Regards

JC

nearlyrich · 9 April 2005 at 3:31PM

Magentasue wrote:

I'm not an expert either but I have seen this site mentioned:

www.whatsthecost.com

I think you need to look at snowballing. It seems sensible to pay as much as you can to the debt with the highest interest and then when that's paid off, allocate the money to the one with the next highest rate until D Day (Debtfree Day)!

That's a great tool to sort out the order to pay off your debts, it tells you how to do it with the least interest payment.:money:

Xbigman · 9 April 2005 at 4:12PM

Pay off and dump the NPCC card. Its a distraction and paying it off is a moral boost. Tell yourself you cleared a card. That might sound insignificant but it works.
Then pay off the Lloyds card. Min payment on the Lloyds plus all spare cash plus BT all you can onto the cap one 0% (you should be able to BT about £1020 by then) and you have about £960 outstanding on the LLoyds at 16.9%. Ask if cap one will up their limit. If they do put the rest of the Lloyds on it. If not you will have to pay 2 months (ish) interest. Some might advise you to try for another 0% but I wouldn't for that short a time. Also, you were trying to dump most of these cards not take out more.
Once Lloyds is gone hit the Sainsburies card for all its worth.

By the end of the Cap one deal you'll have only about 4 grand in debt. This should be clearable without much trouble.
(all figures worked out in my head, don't shoot the messenger)
Regards

X

Dumbledore55 · 9 April 2005 at 8:37PM

Thanks Magenta - the site you recommended is really useful - it shows me exactly what I should be paying to each card. I'll revisit the site when my circumstances change again in June.

Xbigman - I agree I should pay off NSPCC - I'll do that when I get paid at the end of April - should I hang on to the card or cancel it?

johannamse · 9 April 2005 at 11:01PM

nspcc card - cancel it.

Just think...it LESS THAN 2 years time you will be debt free - what a feeling! And then you will have £1000 a month to do exactly what you want with (Ssving, holidays, beer...woo hoo)

Xbigman · 10 April 2005 at 3:34PM

Xbigman - I agree I should pay off NSPCC - I'll do that when I get paid at the end of April - should I hang on to the card or cancel it?

Cancel it. You want it on your credit record that its gone. When you ask cap 1 to up your credit limit in a few months time you can point out to them you paid off and dumped a card with a 9 grand limit, and you only want another 1000 on their card. Sometimes this helps, sometimes not.

On general principal I'd cancel every card as you clear them, except for one. You want a situation where you have one card that you clear every month and that gives some benefit. IE cashback or points of some kind.
Regards

X

Dumbledore55 · 11 April 2005 at 9:34PM

I can't believe how unlucky I can be - got an offer today for 1.9% for 6 months with Citibank - but offer is for existing customers only and I paid off and cancelled my credit card 3 weeks ago!!

Oh well, hopefully something better will turn up soon. Its things like that happening that makes me reluctant to send back the NSPCC card when I've paid it next month - but I'm going to try to be strong and cancel it.

I'm the kind of person who needs to keep the pressure on myself to pay things off or I take the easy option and pay minimum payment only. I'm struggling with my own mindset about paying off more than the minimum when it comes time to only having the 0% offer on Capital One left.

Help needed in my concerted effort to get debt free!

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