what should i pay first

EKAndrew

hi all,

looking for a bit of guidance..........i am currently paying £380-400 per month back to Credit Cards, but apprx 75% of that is going on interest, (so im basically not getting the debt down as quick as i would like)

i spoke to CCCS and they recommended a DMP - however this was not a path I wanted to go down as I'm currently a homeowner and I want to move from a flat to a house (DMP would have given me mortgage issues for the new place)

I also checked "snowball calculators" - and it wasn't pretty, IIRC, it was something like 82 months to clear it all and about £14.5k in interest!

Anyway - I successfully applied for a loan from my bank for £12000 (£266p/m for 5yrs)

My current debt outlays are:
Company - Balance - APR - Monthly Payment
BOS c/c - 5768.66 - 15.9% - 70
Barclaycard c/c 7100 - 20.9% - 165
MBNA c/c - 5405.66 - 24.9% - 165

What I would like to know is how I go about throwing that money at my credit cards. I can still afford to pay £400, so after the loan is paid, I can afford to pay £134 to credit cards.

I had a couple of thoughts, clear the Barclaycard completely (as its the biggest balance) and partially clear the MBNA (as its the highest interest rate) - that means the outstanding credit is with the smallest interest rate. By clearing the barclaycard, I'm hoping that they mighht then offer me a BT deal and as it has the highest limit - i was think of putting them all on here with the hope of a 0% BT or low % for the life of the transfer

Thoughts please!

Walaboobah

Take down the two with the largest interest, so Barclaycard and MBNA, fully clear MBNA and take £6500 off Barclaycard, then throw the extra money at Barclaycard to clear that, then once cleared take out the BOS one.

That's what I'd do anyway

Tixy

I'd also go with clearing the MBNA card first. However you could run both scenarios through the snowball to see how much difference it makes in interest, if you think bc are more likely to offer a new 0% BT deal than mbna.

Storm

Clearing the highest interest rate first is the golden rule. Also, will the BOS take a transfer at the current rate? If so, that will get rid of both those high rate cards. If they won't, and you have the willpower the other option to to pay more off the higher rate card each month, but spend the equivalent amount on the lower rate card (so you're effectively doing your own little balance transfer each month). One way to do this, and something I did when becoming debt free was when I went to the supermarket for example, if I spent £100 on the low rate credit card, that I would normally have done from my current account, then I immediately went home & transferred £100 onto the higher rate card.

Time_to_face_the_music

Ring all 3 and tell them you are thinking of closing the account and see if you get any 0% offers.

Failing that, definitely all of MBNA first, which leaves you with £6594.34 to pay off the BC. The minimum payment will drop right down and you should be able to clear that in less than a year which will leave you with the whole £134 per month to throw at BOS.

Please make sure you cancel all of the cards and do not use them again. There are far too many stories here from people who have consolidated their CCs into a loan then gone on to build up the same amount of debt again on the cards.

Walaboobah

Time_to_face_the_music wrote: »

Please make sure you cancel all of the cards and do not use them again. There are far too many stories here from people who have consolidated their CCs into a loan then gone on to build up the same amount of debt again on the cards.

yep :whistle:

RAS

Any spare capacity on the BOS card?

If so transfer some of the debt from the MBNA card across ASAP. That will make your payments slightly lower and if you keep doing it over time will save you a fair bit of money.

EKAndrew

hi all - an update.......and thanks to everyone who had already replied
i called BOS and Barclaycard to see if they currently had any BT deals on at present, both said no.
BOS advised me that if i were to clear that account, and called once the a/c was clear they could pass me through to their welfare team to see if they could sort something out for me - worst case scenario would be that they would accept the balance transfer at 15.9%
Barclaycard didnt really listen to me, or understand where i was coming from! They tried to increase the limit of my account so I could do a BT. I told them that was not what I wanted. They did say that if my account was cleared, they may provide an offer - but nothing was available at present.

That got me thinking..........do i pay off the BOS c/c, and hope that they offer me a good BT deal? If they do or they dont, I still transfer the balance from MBNA to this card, as it has the current lowest interest rate?

And with the remaining monies, pay as much as I can off the Barclaycard?

I should also have mentioned the MBNA a/c is already closed as I refused an interest rate hike from them

Thanks again

Walaboobah

You have 12000 from the loan right?

Why not clear the MBNA one, two reasons, no chance of spending on it again and it's the one with the highest interest

That will then leave you with c £6596 which again I would use to pay off your Barclaycard, leaving you c £500 on that card, keep paying the £70 a month on the BoS one, leaving £64 a month to pay on Barclaycard which should more than cover the minimum payment.

Make sure you cut up the Barclaycard though as you don't want to spend on that once it's been paid down, that's what I did and you can see the mess I'm in!

RAS

Can you answer the questions?

What is the limit on the BOS card at present?

EKAndrew

RAS wrote: »

Can you answer the questions?

What is the limit on the BOS card at present?

£5850 - so unless it gets cleared, there's no room to play with