help! i've got some money... who to pay off first?

beckystanway

I'm about to come into some money - about £4000. Though this is great news and though I am dedicated to doing something worthwhile with it I don't know what to pay off first!

My main debt is a bank loan at 10% which was £6000 - but the balance shows on the statements as just under £7000 - though the early repayment fees arent a disaster. I've got a store loan - which if I paid it off now would be £700. I have a 0% credit card (but not for much longer on 1/2 of it) with a debt of £2600. I also have a £700 credit card (quite high interest which I didnt mean to spend!). I know these all need to be paid off - but which one first? On a monthly basis - the bank loan is the payment that hurts - but perhaps taking away the other complicated payments would help?

To add to complications I also still have an old interest free overdraft of £1500 and a council tax bill which would be nice to pay off in one lump sum (£750). I've also been offered an unpaid work placement for 3 months... but I think the debt means I can't do that

Any advice would be much appreciated!

bananakinz

I think I would get pay off as much as you can from the other bits, leaving the loan - it would be such an emotional boost just to say 'I've got one debt'

Can you re-jig the bank loan as the repayments fees aren't too much?

pudding06

What are the interst rates on your cards/loans. Inc the )% for half, but what about the other half. and your store loan? What are the penalties for paying off your loan early?

without knowing that though from your info

IMHO I would

pay off the £700 credit card as its at high interest. so no monthly payment to make either. AND DONT USE IT AGAIN:p

whats the interest rates on these actually. I really depends on that. I would pay off the store loan unless its at 0% which is unlikely.

I'd then pay off your 0% card since you have a balance on it anyway so you are paying interest on that, and if its going up anyway soon,

then that'd cover the £4000 nicely.;)

THen put all what you would have spent on your other payments into an account to pay off you loan early

or are there penalties for paying extra per month?

just my thoughts. Other dfw feel free to shoot me down in flames,:rotfl:

and anser these questions if you can please so we can help you proper-like:T

pudds
pudds

CLAPTON

in general you should pay off the debts with the highest effective APR.

however i'ld get rid of the council tax bill first.

is the interest free OD likely to start charging? is so maybe get rid of this too
without know the full details of the loans and the APR of the CCs it not possible to be more specific.

beckystanway

bananakinz wrote:

I think I would get pay off as much as you can from the other bits, leaving the loan - it would be such an emotional boost just to say 'I've got one debt'

Can you re-jig the bank loan as the repayments fees aren't too much?

wow fast response thanks everyone!

ok.. one by one... i havent asked about rejigging the repayments - i didnt know they could do that? they are usually very helpful so i'll try that.
definitely agree about just having one debt...

beckystanway

What are the interst rates on your cards/loans. Inc the )% for half, but what about the other half. and your store loan? What are the penalties for paying off your loan early?

the store loan is 14.9%, credit card 22% (i think), for the credit card - its 0% for 3 months on purchases - just under half of the debt, and for 9 months with the other half. after that it will be 15.9%. i took the card out about 2 months ago. penalties for the loan is 2 months interest.

beckystanway

CLAPTON wrote:

in general you should pay off the debts with the highest effective APR.

however i'ld get rid of the council tax bill first.

is the interest free OD likely to start charging? is so maybe get rid of this too
without know the full details of the loans and the APR of the CCs it not possible to be more specific.

as far as i know they arent planning to charge me any time soon- the only thing is i was hoping to pay this back so i can claim back some bank charges and i didnt want them to close my account and demand the money back! i dont know what the chances are of this but it would be nice to get rid of that account.

pudding06

Is your council tax bill for arrears? or is it just thats how much you still have to pay?

If its arrears then pay it.

If it isnt then keep paying it by direct debit!!!!!! as thats 0% interest.

pudding06

Definately pay off the £700 storeloan and the £700 creditcard as theyre really high interest rates.

thats £2600 left.


now then......

beckystanway

they're happy to wait for the council tax... its on a summons thingy - we were waiting for an appeal for the banding and they got upset and want a direct debit now - but i can pay it at my usual rate ok. i'm told it doesnt affect credit ratings anyway?

beckystanway

so... with that 2600 - i could pay off half the second credit card (the 0% one) and the overdraft... then i can write a lovely letter to barclays demanding lots of money that they took off me... and pay off the rest of the overdraft with that?!

any thoughts?