1 debt vs. 2 debts

squidgychesspiece

Hi All :wave:

I have a dilemma which I posted on the diary board but might be better here thinking about it - once I start a new job next week I want to pay my remaining savings (from redundancy money) towards this debt.

There should be enough to pay either
a) mbna in full (highest apr) or
b) halifax and hsbc in full

I'm thinking b) as although mbna is higher apr I think it will be a huge psycological boost to clear 2 cards as opposed to just 1 and have been majorly demotivated.

However the mbna minimum payment is twice the minimum payment each month of the other 2 combined so quite a lot to find on my salary which is £7k lower than it used to be.

Which would you go for if it were you?

[Deleted User]

Pay debts in order starting with the highest to lowest APR.

So, mbna in this case.

Following this redirect the previous mbna payment to whichever of the other two debts has the highest APR. If the APR is the same on both then redirect to lowest balance and pay a second one off quicker.

I can understand the feel good factor could be good having paid off 2 instead of 1 debt - but when they are all gone you'll feel even better, and that will be quicker if you pay them off highest to lowest APR.

Good luck with whatever you decide,

D9

paulmapp8306

Definately the MBNA. 1 debt or 2 - psycologically it MAY feel better to only have 1 - financially its definately not in this case.

squidgychesspiece

Thanks both, I think I knew that was right really but had a bee in my bonnet about wiping off 2 debts! Oh well, still a step in the right direction :beer:

moohound

The higher APR is the one to go for, as per snowballing guidelines. :j

Time_to_face_the_music

squidgychesspiece wrote: »

Hi All :wave:

I have a dilemma which I posted on the diary board but might be better here thinking about it - once I start a new job next week I want to pay my remaining savings (from redundancy money) towards this debt.

There should be enough to pay either
a) mbna in full (highest apr) or
b) halifax and hsbc in full

I'm thinking b) as although mbna is higher apr I think it will be a huge psycological boost to clear 2 cards as opposed to just 1 and have been majorly demotivated.

However the mbna minimum payment is twice the minimum payment each month of the other 2 combined so quite a lot to find on my salary which is £7k lower than it used to be.

Which would you go for if it were you?

Well done on the new job :j

Fantastic that you want to use the last of your redundancy money towards your debt :T

Definitely MBNA, it's got to be the highest APR that is the first to go

bargainbetty

Perhaps you should contact all the card providers and ask what offer they would give you for balance transfers first?

If you can get it in writing that they will give you a 0% deal for 12 months, or a low-life-of-balance deal, it might be worth clearing that card in full, and transferring the next highest APR card onto that, to reduce your future interest and bring the rest of the debt down faster?

If no one will offer, then definitely the highest APR card!

squidgychesspiece

bargainbetty wrote: »

Perhaps you should contact all the card providers and ask what offer they would give you for balance transfers first?

If you can get it in writing that they will give you a 0% deal for 12 months, or a low-life-of-balance deal, it might be worth clearing that card in full, and transferring the next highest APR card onto that, to reduce your future interest and bring the rest of the debt down faster?

If no one will offer, then definitely the highest APR card!

Thanks Betty, this is a fab idea I can't do it with Halifax as I closed the account ages ago to dodge a rate increase and am just clearing the balance but will try with mbna.

I did ask something similar before (we want to keep one cc account once we are debt free and have a card each, effectively a joint cc account for emergencies and as we've never had problems with mbna they were the obvious choice) - I asked mbna if once I'd cleared the balance they could drop the 34.9% apr to a reasonable rate and the boy on the phone said he couldn't possibly say as he has no control over things like that and it's all system generated? Typical :wall: I will try again though. Let you know how I get on

squidgychesspiece

Called mbna and got the standard response - the rates are all applied by the system with the staff having no input into the decision and so they can't tell when I'll be eligible for a 0% if ever!

They said best to apply for another card to get a 0% deal but not even going to bother - I can't imagine anyone would lend someone with our level of debt anymore money!! Saying that, given some of the posts on the forum who knows :eek: