Snowballing?

babes21

Sorry if this question as been asked a hundred times before, but i wondered if anyone could shed any light and give an example of what snowballing is?

Thanks in advance x

Hippychick

Basically you repay your debts with the highest apr's first whilst still paying the minimums on the remaining, this way you pay less interest.

Take a look at https://www.whatsthecost.com and slect snowballing on the left hand side it will calculate your snowball repayments.

babes21

Thank you x

hypno06

And, importantly, it gives you your debt free date - that all important light a the end of the tunnel.

Then you can play around with it and see what difference it will make to pay an extra £10 a month off, whether it will bring your debt free date forward by anything etc

I love it! (sorry)

babes21

I can't seem to do it .

At the moment i have a card which as a balance of £208.77, it says the purchase interest is 2.311% for this month.

The minimum payment this month is £19.20, i'm taking it that most of the interest would swallow this up?

hypno06

You are right in thinking that the minimum payment will be made up mostly of interest. If you can get your APR from the card provider and put that in the snowball it will work, or perhaps someone who has their maths head on will come and tell you how to work out your APR from the monthly rate as it is not quite as simple as multiplying it by 12 from recollection.