which order to pay CC please

missladyannie

Hi everyone, i've managed to get a couple of 0% cards of £1400 each and have transferred balances from our Barclaycard across.

This leaves a large Barclaycard with a balance of around £6500 left (card limit £8200) which is about 20% apr (I couldnt get a balance transfer large enough for this)

Should I concentrate on now clearing the Barclaycard, or clearing the 0% cards first?

Any advice welcome! Many thanks

[Deleted User]

Pay debts off from most expensive to least expensive.

After paying the minimum towards all debts, overpay on the one that's costing you the most in interest (Barclaycard).

By doing this, you reduce the amount of interest that you pay back overall.

missladyannie

Hi everyone, I have been thinking about this, I know the 'rule' is to pay of highest interest first, but should I take advantage of my BT and try and pay that off the quickest, then transfer some more over, pay it off etc and continue? It seems that the BT is going to waste if I am paying minimum on that? I dont know, maybe i've got it all wrong!!! Can someone advise please x

[Deleted User]

Follow domino's advice. Doing it your way means that not only are you paying interest for no good reason, you're also paying BT fees. Which is a little insane.

Paul_the_Painter

The best way not to "waste" your interest free balance transfer is to use it to it's maximum. The best way to use it to it's maximum is to not pay it off at all, however you must pay the minimum.

The "rule" is there for a reason, because it's right!

CLAPTON

if your 0% deals have any 'spare' credit on them, then BT some of the 20% barclaycard debt; (you don't have to transfer all the balance)

and as others have said, pay off the barcalycard debt first as it is the highest APR

chattychappy

missladyannie wrote: »

but should I take advantage of my BT and try and pay that off the quickest, then transfer some more over, pay it off etc and continue? It seems that the BT is going to waste if I am paying minimum on that?

Generally 0% offers have an expiry for taking them up. Eg you might well get 0% for 12 months, but only on transfers carried out say, within a month of opening.

In any case, if you keep transferring as you suggest, you will keep paying the BT fee (3%?). So it is better to pay the minimums only.

I agree with the gist of what has been said above. However, you have to consider what happens when the 0% expires. If the balances then attract, say, 35% it could be worth beginning to pay down this balance rather than the 20% balance as you get close to the end of the deal. It depends on your confidence in getting a new card with a new offer to take over.

One further tip. The usual advice is not to put spend onto a BT card. This stands as a rule of thumb, but if carefully done it can further maximise the value of the BT:

Let's say you have a £1000 balance on 0%. The minimum payment is expected to be around £50. You pay the £50 and next month you will have £950 on 0%.

Instead of this, you put £50 of your usual shop on the card, just before the statement date. The statement will show £1050 (plus interest), minimum will be about £52.50. Just after the statement date, you pay £52.50. This will be first applied to the interest bearing purchases. You will be left with a balance of around £1000, interest free.

So you now have £50 more than you would have done on 0%. This will be £300 after 6 months. The price of this will be a few days interest on those purchases. The benefit accumulates, but the cost in purchase interest stays about the same each month. It will be pence - because the payment arrives soon after you made them. Yes - the APR on those purchases will be high but only for a short time in return for which you are avoiding having to pay down your 0% balance. (If you weren't going to put those purchases on a card where you get up to 56 days interest free, then there will be no additional cost as you would have paid interest anyway.)

This extra £50 cashflow each month can be used to pay down the 20% balance.

This makes use of the positive payment hierarchy by ensuring as much of your cashflow goes to the higher interest rate balance as possible without the minimums interfering. However to make best use of this, you must spend soon before the statement date and send the payment soon afterwards. It doesn't work well if you use DDs cos the payment won't be taken until the due-by date. But you might still be better off - particularly if you are paying interest on new spend anyway.

Finally, always pay at least £1 more than the minimum. This will avoid the "minimum payment" marker on the credit reference agency records and might assist you in further applications later.

missladyannie

Thanks everyone, I really appreciate your advice, i'll carry on with minimum on BT card and max on 20%, many thanks

chattychappy

Don't forget to pay £1 more than the minimum as per my last post.

forgotmyname

Why pay off a 0% debt when your paying say 20% on another one then transfer another bit of the 20% to the 0% and repeat?

Your paying 20% on that amount when it should be 0%.

Pay as much as you can afford... Even the odd pounds all add up over time.
Dont think i will keep ££ back just in case.. Pay it off the card and if your desparate use the card to buy lunch or whatever.

It was only when Martin Lewis was on TV and worked out minimum payments would take many many years to clear the balance i actually sat down and worked mine out.