Paying off credit cards

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We are in a position at the moment, to pay off a couple of credit cards thanks to a moderate windfall. We can pay off one or two of them in full, and then want to concentrate on the others using the money we would normally pay monthly to these two. My question is this - is it better to pay a little extra off all our cards, or concentrate on one at a time and clear them that way?

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  • YorkshireBoy
    YorkshireBoy Posts: 31,541 Forumite
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    In general, you should pay any extra cash you have off the card with the highest APR.

    What are your cards, limits, APR's, and current balances
  • Calchas
    Calchas Posts: 405 Forumite
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    I guess the individual interest rates you are being charged is the key.

    If you pay off the ones that are charging the highest interest rates you can then concentrate on those with the least.

    I think this method is called, "snowballing".

    You might look at 0% balance transfers (probably with a fee) or a lifetime percentage balance card to give you some breathing space as an alternative to paying higher rates of interest on your other cards.
  • jenkofreeze
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    Interesting posts. I'm in the situation where my cards with the highest APRs also have the highest balances on them. I'm in the more complicated position of systematically (sp) paying of the cards with the lower balances /APRs FIRST and then doing my shuffling where it allows me.

    Immediately more expensive but I SHOULD be in better form as the months go by. Owed on Eight cards in 2006-8, this month I drop down to oweing on Seven. YAY!
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
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    Interesting posts. I'm in the situation where my cards with the highest APRs also have the highest balances on them. I'm in the more complicated position of systematically (sp) paying of the cards with the lower balances /APRs FIRST and then doing my shuffling where it allows me.

    Immediately more expensive but I SHOULD be in better form as the months go by. Owed on Eight cards in 2006-8, this month I drop down to oweing on Seven. YAY!


    your method will take a longer time to pay off and you will pay more interest. other things being eqaul always pay off the debt with the highest APR no matter what the balances are
  • jenkofreeze
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    my highest APR card has over £9000 on it, my lowest APR now has £30 on it. Which would YOU Pay off first?
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
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    the one with the highest APR
  • normanmark
    normanmark Posts: 4,156 Forumite
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    Definitely the highest APR. The interest alone on £9000 is a crippling amount. Reducing it by the very least half will make a big difference on the repayments.

    If you can afford to pay it all off then go for it.
  • jenkofreeze
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    In which case until you pay my £9000 off (and then the next higest and so on down the line) there is £30 stopping you from being able to 'Shuffle' large amounts to the lowest APR (or 0% APR)

    What am I missing here? Please explain, because my logic comes from the articles on this very board.
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
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    as I said, all things being equal then always pay off the one with the highest APR.

    now if you're saying that by clearing one card you then can get a 0% BT deal on that card then obviously all things aren't equal.... but I can't know your details.
  • jenkofreeze
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    Thanks for the reply Clapton. That's why I mentioned 'Shuffling' in my intial post.
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