Snowballing Credit Card Debt Advice Please

rubyinthesky

Okay, so first post, and I've read and read the forms over the last week, as I'm trying to sort out my debts on my credit cards, but I can't seem to work out what seems complicated to me and hoped you could help.

I was on Citalopram for a few years, following postnatal depression, and I swear that didn't help my shopaholic tendencies. I've been off the tablets for a good long while now and starting to take control at last. I've even closed my Next account (transferred to 0% balance transfer for 12 months), cleared an overdraft with Sandander bank account with same balance transfer, which was costing me £25 a month (o'draft and underfunding), which pays the minimum payment on the credit card. I wasn't using this account as I'd moved everything to First Direct Bank in January, but still had a £400 o/draft. Rather than just pay the minimum payment, I need to start clearing some debt and I need some guidance if possible. The only (!!) debts I have now are three credit cards:

Barclaycard - this is the complicated one as I transferred a balance twice, so have different interest rates. On £6055, the 0% deal came to an end on Monday this week. The total balance is £7916, and unfortunately I don't think I can apply for another BT for the amount liable for interest as I'm unlikely to get £6k on new credit card (Noddle, my score was 3/5) and estimated interest is £60-ish for September payment. Minimum payment for that one is about £173 for September. Remainder of balance 0% runs to April 2013. Credit limit on this is £9300.

MBNA - I had £440 on this one, before the BT transfer I have just done, which I was paying interest on - balance now £2605 with the £2100 I did B/T for, promotional rate ends Sept 2013. Minimum payment is £32 for September. Credit limit is £4000.

Halifax card is £2548, 0% until April 2014 and minimum payment is £25.48 for September. Credit limit is £2700.

I do have B/T offers on most of the cards, although not much available credit limit, so don't think it's worth the fees to move anything across to different cards - ie off the now interest payable £6k Barclaycard.

I also have a Santander credit card with £6000 credit limit, which I phoned to cancel on Saturday, but was talked around by the sales team in to keeping open. Although it appears that I don't have any promotional offers on B/T anyway - do I close this one, in case I need to move my balance to a 0% deal in the future? I did apply Sainsburys loan few months ago, but was turned down, so didn't want to make more applications just yet but ended up doing one with Fluid, think is was a life of balance for the full Barclaycard amount, but they couldn't give an immediate answer and said they would contact me in 7 days. Then stupidly tried on my husband's details (with his permission) same answer.

I can probably afford to pay minimum payments, plus £100, possibly more - up to £150 a month (now I've got rid of o/draft/Next payment and a few other little things I've cancelled, but where do I put this additional?

Will be really grateful for any advice, as I've been trying to work this out for so long and going round in circles. Help!

makalu69

Hi,
I would suggest focussing on paying the one that is charging you the highest rate of interest as that way you will be getting the greatest value out of your payment.

Good luck.

Mak.

rubyinthesky

Thanks Mak, I thought that and I'm rubbish at maths, but as a massive approximation, if I took of £60 for interest from the minimum payment over the whole repayment (I know this isn't right as interest/min payment would reduce) and add £150 a month additional, it would be about 2.5 years to pay off?? I suppose that it would also be best to pay this one off, as I am more likely to get smaller credit limits offered generally. However, I was thinking if I paid off the Halifax, for instance, then I would have less credit available to me/outstanding, and may be more likely to get a good 0% deal in the future. These are the circles I've been going round in.....

Fruit_and_Nut_Case

Welcome to MSE, Ruby. :hello:

There's a handy calculator HERE if you have the patience to fill in the blanks.

rubyinthesky

Thank you Fruit and Nut Case, both for the welcome and the link! It looks more simple/effective than one I looked at. Now, do I treat the Barclaycard balance as two seperate debts, due to the different amounts one with interest and one still 0%? I'm not sure how I would do this as it's one minimum payment though, in case I have to input that?

Anthorn

Depends on the APR. If there is one that is at a higher rate then putting the extra into that one will have the best bang for the buck as previously stated. If the APRs are much the same then I think it would be better to clear the one with the smallest balance first because the reduced overall balance could open up new credit also as previously stated. But to get the full effect of clearing one of the cards that card would also have to be closed because credit limit as well as balance is taken into consideration when deciding how much new credit should be made available.

rubyinthesky

Thanks all!

I've just done the snowball calculator and not sure if I've worked it out right, as there are so many different balances/amounts/interest rates on the Barclaycard, and MBNA, and I'm not sure that I've input the right rates - they aren't blooming easy to find on the CC websites I have to say!! I think MBNA will be the highest, because I did a transfer to current account, which I think is a higher interest rate of 18% after the promotional period.

I don't want to use my overdraft at all on my First Direct account, so my thinking is possibly to wait until end of the month and whatever is left, throw that at the MBNA card, then Halifax, then Barclaycard, in that order, as shown by the Snowball calculator. And definitely in a few months, try to do another 0%?

Do I close the Santander account in the meantime, or keep that open in case of a B/T offer that I could move the Barclaycard to? Although I'd have to take the fee into account, I still think this would be beneficial to hopefully get a year interest free, rather than the £70 to £100 I'll be paying eventually.

Sorry for waffling!