0% and paying off cards - CONFUSED!

DaisyMc

I have found this site fantastic in helping me tackle my problems, so first of all, thanks for all the wonderful advice on here. I'm just wondering if any of you experts can help me with some thoughts to get the most out of a lump sum I have to pay off cards and one balance transfer 0% I have available to me to cut down on interest.

Long story cut short, have amassed credit card debt but have had a windfall of £9,000 that I want to use in full to pay off debt. Here's the sums of my debt first:

£11,200 - CARD 1, 15.5% paying minimum payment of about £180 a mnth

£4,800 CARD 2, 19.9% paying minimum of £113 a month

£2,200 CARD 3- 19.9% paying minimum of £44 a month

£7,200 CARD 4 - 29.9% paying minimum of £240 per month

All of these are cards are currently outside of eligible tranfser, but have another one - which I have never used - for £3700 with 0% balance transfer for 17 months.

I can afford all the payments above and about an extra £100 on top to get it down but would appreciate any thoughts on how to maximise the money I have fortunately got to pay some of this off and the 0% transfer

Thanks!

camuk81

First reaction card 4.

I've taken a punt and if you are paying 3.5% back each month you pay around the £240 mark but £170 is eaten up by interest.

http://www.whatsthecost.com/creditCard.aspx

Tixy

Pay all off card 4, its costing you the most in interest. Pay the rest off card 3 as that the next most expensive/smallest balance.

Consider balance transfering from card 2 as much as you can to new card. Presumably card 2 is a different issuer to new card? (if not switch card 2 and 3 around in the above).

Assuming you still want to pay £577 a month-
Pay the minimum on card 1, 2 and new and everything you have left over to card 3 until its clear (which should be no more than 2months).
Then once thats clear focus everything extra to card 2.

Then in a few months you should be left with just card 1 and new card. In which case you'll be best paying off card 1 and the minimum to card 2.

Having put the figures into the snowball calc (http://www.whatsthecost.com/snowball.aspx) ify ou do the above it will take you 39months to pay off the whole debt at a cost of £4250 in interest. (that assumes a 3% transfer fee and assumes the 0% card will go to 19.9%).

redpete

It's the obvious answer - pay off card 4 and most of card 3, transfer the balance of card 3 and some of card 2 to your 5th card, then continue paying minimum payments on cards 1, 2 and 5 with any extra towards card 2.

DaisyMc

This is excellent, I just didn't know where to start! Hopefully on the right track from now on. They're all cut up and determined to finish them. Thanks!

DreamerV

You should probably be able to pay off all of card 4 AND all of 3 too. You have £9400 owed between them, and a £9000 windfall to use. Plus you'll have what would have been the monthly payments towards those 2 cards £284 (made up of £44 towards card 3 and £240 towards card 4), leaving you only £116 to pay off. You mentioned an extra £100 on top per month to pay off cards, so it sounds if you stretch you may be able to pay them both off immediately.

You'll then have the £677ish you usually put towards card payments (including the extra £100 or so) to put towards cards 1 and 2. From what I understand, you can move some of the balance on card 2 (£3700), to the 0% card, leaving only £1100 on that card. You should be able to pay that off, including new interest, in 3 to 4 months with the £677 (assuming you will still have to pay to card 1 and the new card 5).

That leaves only card 1 after 4 months (and your £3700 0% balance). You should be able to pay a good chunk of card 1 off before interest start accruing on card 5. It seems from the info you've provided you should be debt free within the next 3 years at the maximum.