Best way to manage c.c debt?

billymadbiker

I currently have outstanding debt on 3 credit cards,
Natwest M/c £1000
Natwest M/c gold £2200
Lloyds m/c £8000

I am currently only making the mininum payments (5% for natwest and 2.5% for lloyds) by direct debit. All cards are within the limits, spending is mostly 'purchases' (large tax bill) but £2k on the lloyds card was withdrawn as cash so paying a higher rate on that part!

After a new year review of my finances I have assigned about £300 p/m for clearing these off.

Whats the best way to do it?
I spoke to lloyds on the phone the other day, they told me I was paying as much intrest on the £2k I drew out as cash as the other £6k but that I will not start to clear the cash advance amount of the bill until I have paid off the other £6k, Is this correct?
The only other thing they offered to do was raise my credit limit by another £5k so I could transfer the balance (£3200) from my natwest cards and pay a lower rate.

I have thought about getting a 4th card with a 0% balance transfer rate but it looks like you can only transfer up to 75% of the available credit limit meaning I would need to apply for a card with a £15k limit which I think I am unlikley to get!!

I also thought about a bank loan but I have one outstanding (natwest) so not sure they would be happy to do this either?

MFWannabe

What are the APR's on the cards?

billymadbiker

Freez,
Good question! I though this was supposed to be clearly indicated on the statements?
Monthy interest rate is 1.094 (balance transfer rate) on the natwest cards and monthly rate of 2.075 on the lloyds although according to the statment I am being charged the same rate for both purchases and cash

billymadbiker

sorry,
the N/W gold is currently on 0% as I took that out and transfered some from the lloyds, has another 2mths to run at 0%

CLAPTON

general principles are
pay as much as possible on the debt with the highest APR
however as the credit agencies are now recording if you only pay minimum payments maybe its now best to make small overpayments an each card
transfer as much as possible to 0% card (5000 at 0% is a lot better than nothing at 0%)
although not 100% accurate you can work out your APR by multiplying the monthly figure by 13

is the 300 per month in addition to the minimum payments?

billymadbiker

Yes, the £300/pm is along with the minimum payments being made.
As the outstanding balance reduces the minimum payments will drop so I will add the spare to the £300.
Just wondered if it was worth trying to find somewhere to stick the whole lot at a lower intrest rate or just keep as-is and nail into getting it gone?

izools

RE: Your Lloyds repayments.

The law has changed so that as of Monday 16th your repayments will go towards the most Expensive debt on the account first.

So your next repayment to your LTSB credit card will go toward the cash advance balance first and only when that is clear will you start to repay the cheaper debt, ergo it will cost you less than had you carried the same debt a couple of years ago.

I still suggest overpaying everything you can to the LTSB card whilst you have a cash balance remaining and then overpay the next highest interest rate debt.

Continue ploughing all your spare cash ONLY into the highest APR debt (not highest balance) whilst maintaining the minimum payments on the others - this will ensure the debt is cleared in the cheapest and fastest manner possible.

MFWannabe

I would apply for a new 0% card to transfer the Lloyds card to; if not the whole amount then as much as you can; as you are better off having it at 0% if you can get it
Or apply for a life of balance card; as the interest will be lower than what you are currently paying; check the Credit card link at the top of the page