Money maximisation/credit card debt.

BigTone

Hi,

I need some advice, I have been putting in the overtime at work like no-ones business and at the end of this month (Sep) I should have between 3K and 4K which I am going to plough into getting shut of my debt on credit cards.
My situation is;

Barclaycard - Bal £3800 APR 27.90%
MBNA - Bal £2200 APR 24.69%
HSBC - Bal £1200 APR 22.32%
Abbey#1 - Bal £1250 APR 17.16%
Abbey#2 - Bal £800 APR 17.16%
Abbey OD - Bal £1400 (Manage down @ £140pm)

Salary £40k

I have a fair few questions, so if you could bear with me;

Which is the best way to get rid of this debt?

1. Pay off the highest interest rate card, leaving me with 4 cards and apply for a 0% card to shift these to?

or

2. Pay off 3 of the smaller balance cards, leaving me with only two cards but on a higher interest rate?

I have not applied for any credit cards/loans since 20.01.2010 and that was a single application for a abbey zero card, for which I was declined.

I have had a mobile phone contract since, as well as numerous payday loans until about May, all of which I have paid on time and have not missed any payments on anything.

I am however on a "manage down" for my overdraft with Abbey which I pay £140 per month off.

How will this affect my likelihood of acceptance?

Which cards should I go for? dont want to get rejected.

I am going to check my credit file before I do apply to ensure that everything is in order.

Sorry for the long winded post and if you have got this far, thankyou for your interest, any comments/suggestions/ideas, anything, is very much appreciated.

molerat

What is the available credit on those cards ? How much over min payment have you been making each month ? You probably have too much credit available to get any more.

Pay off the highest interest card first (in your case the highest interest is the highest balance so def pay off).

CLAPTON

what do your cresit records actually say
what is your income

this will affect the likelihood to getting 0% BT or low life of balance deals

otherwise pay as much as possible on the debts with the highest APR except it's best to pay a little more than the minimum on credit cards now as if you only pay the min its often now recorded on your credit report (and is seen as a bad thning)

Mahmood_Reza

Wise move for you to check your credit record first (obtain from Experian and Equifax), ensure correct and request amendments if necessary. Reinforcing the points above, interest will be charged on the capital balance so thus it is important to reduce this, priority being those with higher APRs. It may be an idea to see what the position would if you reduced the debt on a pro rata basis, eg £2,000 off Bcard, £1,000 off MBNA and HSBC, and continue in this fashion - look at the cash amount as well as the APR%.

BigTone

I haven't checked my credit files for a while, 7.99 a month is a bit pricey, I was planning on leaving it until it was needed.

Cards are more ore less between 100-200 below their limits, I have been paying only the minimum for some time as I have been clearing other debts, £1500 payday loans, £jewellery in pawn shop @£400 and paying my monthly loan payment of £211.67.

Salary is £40k per year.

Thankyou for your advice

Mahmood_Reza

BigTone wrote: »

I haven't checked my credit files for a while, 7.99 a month is a bit pricey, I was planning on leaving it until it was needed.

Cards are more ore less between 100-200 below their limits, I have been paying only the minimum for some time as I have been clearing other debts, £1500 payday loans, £jewellery in pawn shop @£400 and paying my monthly loan payment of £211.67.

Salary is £40k per year.

Thankyou for your advice

My understanding was that on payment of a £2 fee to the credit agencies themsleves you have a statutory right to get a copy of your credit file within 28 days (?).

molerat

You are using almost 100% of your available credit, paying off only the minimums, fully into your current overdraft limit and taking payday loans. This will show up as struggling to any lender.

BigTone

Thankyou for the replies, as said, I have managed to save about 3to4k and although I am near my limit of available credit, I want to use this money in the most efficient way possible, to enable me to get rid of the debt that I still have.

chattychappy

Whilst it's desirable to pay more than the minimums, don't do this if it means there is any risk of your missing the minimum next time around or having to resort to a pay day loan again. The extra costs/fees involved will far outweigh the saving in interest by paying more than the minimum.

It seems you have a cash buffer ... I've got nothing useful to add to what's already been said on how to juggle the debts, except don't use all of this buffer to pay down the debt in case something unforeseen happens. Perhaps keep a month's worth of minimums in cash, if possible.

Be alert to letters from CC companies increasing your interest rate. Exercise your right to reject any interest rate rises immediately on receiving notice. (You can then pay down at the current rate but can't put new transactions through.)

BigTone

Thanks,
That has already happend with both my Abbey cards, which I have rejected and am "paying down".

Will keep a bit of a buffer now, thanks for your advice

Typhoon2000

I think its best to assume you wont be aproved for another credit card in the current climate (well not one wilth Zero/ Low interest) and start paying off your credit card debt with that cash your holding, starting with the one with the highest interst till its paid off and then move to the next one.