Which to pay back first? Please advise.

Beatrix_Kiddo

I know that the golden rule is that you are supposed to pay the 'higher interest' card back first (or try to pay more towards that one), but I have a query please.

I have 2 cards, a BC on 6.9% life of balance with about £4k on and a Virgin card also with about £4k on. This card is currently 0% until Jan next year when it will revert to 16.9%.

I have cut them both up.

My query is, should I try and hammer the Virgin card whilst every pound paid actually goes towards reducing the capital owed - as when it reverts, the rate will be a load higher? Or should I concentrate on the BC because it is currently the higher one?

Hope this makes sense, and hope someone can help.

Thank you.

[Deleted User]

Good question. It depends on how long you think you will take to pay it back. And whether you think you will have other BT options open to you at the time.

If the answers are 'a long time' and 'no', then you'd be right to target the Virgin. But the answer might not be that simple....

Beatrix_Kiddo

I think ' a long time' and 'no' sums the situation up admirably.

[Deleted User]

In that case, I think you're right to target the Virgin, as it'll cost more than twice as much as the BC when it reverts.

So every 5 months you have debt on the Virgin is equivalent to a year on the BC.

ironlady2022

I would be very careful here, when you say hammer, this could really build up a sum and when the 0% runs out, you may not get a 0% so you would end up in the same situation. I would just pay minimum onVirgin and try and clear BC.

[Deleted User]

mayling03 wrote: »

I would be very careful here, when you say hammer, this could really build up a sum and when the 0% runs out, you may not get a 0% so you would end up in the same situation. I would just pay minimum onVirgin and try and clear BC.

In this context, 'hammer' = pay off as much as possible.

Pheebs67

For now, pay what you can off the Virgin card to reduce the balance as much as possible by the time your teaser rate expires.

What you do after this depends on how much you're able to pay off each month.

Wobblydeb

How about putting the money you would have paid off the Virgin card into a savings account? You'll earn a bit of interest, and then transfer it next January? You might just time it right for a regular saver (they offer the best rates). Lots of them run for 12 months, so will mature next February - just in time for your first payment at 16.9%....

[Deleted User]

Wobblydeb wrote: »

How about putting the money you would have paid off the Virgin card into a savings account? You'll earn a bit of interest, and then transfer it next January? You might just time it right for a regular saver (they offer the best rates). Lots of them run for 12 months, so will mature next February - just in time for your first payment at 16.9%....

An even better plan.

Mr.Mulla

Wobbly made a very good point. I think his is the best course of action since your money would be earning interest for you before you use it to pay Virgin's balance.

Beatrix_Kiddo

Never even thought of that - thanks, what a good idea.