Which one to pay first?

Hello everyone

Hope this is the right section

I'm about to recover a payment of £5600 from a PPI Claim (Thanks MSE/Resolver :beer:) and two unsecured debts I want to take a good old chunk out of.

The Virgin Credit Card stands at £3651and is on a 0% until December 2018 when it becomes a 17.48% card

The Co-operative Bank personal loan is currently at £7267 with repayments of £169pcm until November 2020 running at approx. 17% APR

The temptation is just to clear the cc and go "Yay! Debt gone!" but is that silly to do when it's on 0% and I could be substantially reducing the larger balance that's at a larger APR?

Please help me.

Thank you!

Comments

  • Jo_Blogs
    Jo_Blogs Posts: 753 Forumite
    Debt-free and Proud! Mortgage-free Glee!
    Personally, I would pay a large chunk of the money, say £5,000 into The Co-operative Bank personal loan, especially @ 17% APR. That would help to reduce the monthly repayments of £169pcm.

    Now, whatever reduction that produced, I would be looking to predominantly reduce the personal loan further and get that paid asap. I would be looking through my overall monthly budget to see if I could help reduce further unnecessary spending and initially pay anything extra towards the loan repayment.

    Depending on your personal circumstances, I'd put £600 aside for emergencies or just incase I needed / wanted to make a larger payment onto the CC. As the CC is 0% until 2018 it would make sense to repay the loan first. But again, I would be keeping a very close eye on the spending on the CC to see if there are any unnecessary purchases that could help reduce any future CC spending, and perhaps any savings from that, I would put towards paying off the CC.

    That way, I would be paying off both, but with a far greater emphases on the loan, especially @ 17% APR.

    Others may very well have a completely different take on the situation.

    All the best
    Saved Nitty Gritty £7440.75 [149%] / £5000-[Sep] £58.44:starmod: for the 'Save 12k in 2017' #157
    2017 Womble #35 £3463.27 ;)Sept NSDs 4/15:staradminCCCChl 9/12 months:D
    Sept PPChl#002 Pts 71
  • That's lovely, really appreciate the response and that might well be the best course if action.

    Thank you ��
  • MrsLWW
    MrsLWW Posts: 86 Forumite
    Definitely the loan. You'll find that by paying a large chunk of the loan off that you will also save alot more in interest, so you might find that it leaves you with even less than £1667. If you can, I'd see if you can transfer the remainder of the loan onto your credit card BUT I'd also be putting that £169/month you're currently paying towards your loan to your credit card as soon as your CC is paid off through whatever way you do it.

    Totally agree with Jo Bloggs - anything else you can scrimp and put towards it, go for it.

    HTH

    PS well done on actually putting the money to good use, I know alot of people who would just blow it on rubbish and then rue the day!
    Debt peak approx £30,000 :eek: now debt free!!! :j
    My parents always said "If you can't afford it cash, you can't afford it!" so true!.... mind you, turns out we can't afford much lol :rotfl:
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