Snowballing question

LittleMoog

Hi everyone,
I'm just in the process of shuffling all our cc debt onto 0%/lower interest cards, and I need a bit of advice on how best to snowball the resulting debts:
1) capital 1 £3130 @ 15%
2) RBS £1660 @ 0% until Jan2011 then 14.9%
3) Egg £2430 @ 0% until Oct2011 then 19.9%
4) Nationwide £3400 @ 0% until Nov2011 then 16.9%
5) Barclaycard £500 @ 27.9% :eek: obv this is target 1

Current snowball = £675, should increase to £800 from September as we're moving and costs will go down.

When I put this info into the snowball calculator, it listed the debts in order of APR, regardless of the length of the 0% period. Is this right? Eg, once Barclaycard is clear, the next target is Egg, even though it will still have 11 months interest free, but cap1 is at 15%.

As we're aiming to be cc free by the end of 2011, I thought the best thing was to pay down the interest bearing debts, as by the time Egg and Nationwide start charging interest we'll be close to clearing them, but now i'm confused!

I'd welcome any advice on this

LittleMoog

Bumping up!

LittleMoog

And again..... anyone there?

amiehall

Okay yes you're right, it makes sense to pay the interest bearing accounts first. I'd perhaps suggest that when you're doing the snowball, you put in 0% as the interest rates on the cards on the special rates and do a new snowball with the proper rate once each promotional rate ends.

It looks like all your deals are quite long-term so if I were you, I'd pay off the Barclaycard first then the cap 1, then RBS, Egg then Nationwide.

It's just that the snowball calculator isn't clever enough to take into account 0% deals unless you physically enter 0% as the interest rate.

amiehall

Oh I just looked up the calculator and I see what you mean. I personally think that it's being silly about the order of payments and would do it as listed above. This only works if you can get the balance cleared quickly on the high interest Egg card before the rate runs out though. I'd stick to your guns and ignore the silly computer.

LittleMoog

Thanks for the reply, I had got myself in a muddle and wasn't sure if I was being a bit dim, or the computer was wrong! I think the only effect entering the 0% deal has on the snowball calculator is that it can calculate the interest correctly, it doesn't take it into account when deciding how to pay things.

So, I will pay BC, Cap1, then RBS (if we can't tart it to another card), then Egg, and then Nationwide. Even if we end up paying a couple of months of interest at the end, it won't be the end of the world, as we'll have saved so much interest over the previous year (this month we'll have gone from ~£200 a month to ~£40 a month :j)