Hit one account or spread?

defaultworry

I've asked this question before but never really got a consensus on the response.

I have several outstanding debts with high amounts owed (more info here - http://forums.moneysavingexpert.com/showthread.html?t=1935695&highlight=the+walls+are+closing). The plan is to hit these across the board and reduce amount owed on each thus total credit being used so I can get a 0% BT card.

Main problem just now is the stupidly high interest rates on all my cards making the reduction pretty tough i.e I paid a total of £5 off of £70 to Virgin after interest was added. Should I continue to spread the payments or keep hitting one card?

The main factor is getting the 0% card - will a credit check review the amount of credit used on each card or collectively?

grastgirl

I think you need to hit one card (maybe two) whether your aim is to clear your debts or free up credit. Which card depends a bit on what credit limit is available on each card rather than what you are using (which isn't given in your previous thread), so it may be best to put any excess towards paying off the card with the highest credit limit, so you can cancel it. Normally on here people are trying to minimise the amount of money they pay out clearing their debts which is why the snowball calculator was suggested to you.

I suspect you may have problems in the current climate anyway with getting a new card, perhaps looking at a low rate life of balance card would be better.

Numpty_Monkey

Snowballing is usually the way to go
put the details in this calc
http://www.makesenseofcards.com/snowcalc.html
and play around with the numbers

defaultworry

Credit limits are as follows:

Virgin - £2,500 (avail 200)
BOS - £1000 (avail 250)
Egg - £1000 (avail 200)
B/Card - £1000 (avail 200)

All cards have % of 26-29 except the b/card which has 0. I have been told I can get a b/transfer with b/card at around 6 or 7% - is it worth hitting that card in the next month then transferring the Egg or BOS balance across?

Hopefully I get a 0% card in a few months because all that is preventing me from having a good credit score (according to Experian) is the high balances on all my accounts.

GeorgeUK

I think creditors woould be looking at the total amount of credit you have and the total used. I wouldn't care if you preferred using the M&S card more than the Tesco one.

There are 2 things i would look at.
Do any of your cards have a low balance that you may be able to clear quite soon and possibly get a balance transfer deal as an existing customer?
If not, then i would tackle the debt with the highest APR so you are paying less interest.

defaultworry

GeorgeUK wrote: »

I think creditors woould be looking at the total amount of credit you have and the total used. I wouldn't care if you preferred using the M&S card more than the Tesco one.

Thanks for that info.

No cards with lower balance but I can commit £540 to one card next month. My b/card idea or Virgin (which has highest balance (with BOS) and highest owed)?

true27

Personally I prefer to hit one at a time, basically because I find it far more satisfying to see the number of debts reducing rather than the overall balance. I think it depends on where you get your motivation from to be honest

GeorgeUK

Not sure - is the interest rate you will be paying on the b/card 6/7% or is this the actual transfer fee? Most fees are about 3%

If the 6/7% is the actual rate, how long is this applied for?

defaultworry

My head is pretty sore thinking about this!

If I clear the b/card balance and transfer the BOS balance across I'll be looking at

Virgin - £2,300 (29%)
Egg - £800 (roughly 26%)
B/Card £1,000 (6/7%)

Is that better than the current situation or worse!? Help!

defaultworry

GeorgeUK wrote: »

Not sure - is the interest rate you will be paying on the b/card 6/7% or is this the actual transfer fee? Most fees are about 3%

Interest rate for the life of the balance - not sure what the fee is.

grastgirl

If you put it in the snowball calculator it will tell you which is worse. I would guess that the transfer to the barclaycard would be better overall, because your interest would be less overall if you pay them off over the same time you currently plan to. Also you could just pay the minimum on the barclaycard while you clear the debts with the higher rates. You must make sure you don't spend on the barclaycard if you decide to transfer. Personally I'd try to see if the Virgin balance could be transferred at the lower rate.