Which order to pay off my debts?

lizzy81

Hi would anyone be able to give me some advice on my situation?


I have finally taken my head out of the sand after running up stupid debts and living beyond my means for far too long. I took the first step 6 months ago by cutting up my credit cards and have not spent on them since, but I am currently only paying the minimum payments on my credit card and I have had my overdraft since university 10 years ago which I am up to the limit in every month.

Total Debt - £8,500

Barclaycard £4239.95 0% interest for 16 months

Virgin Money - £2972 which has been on 0% but is about to expire and will go up to 1.1678%

Overdraft - £1500 I pay £6 a month in interest plus £7 a month account fee

I have worked out a budget that will allow me to pay off an extra £100 a month but I don't know which debt is best to pay off first? I feel like even with the extra £100 it isn't going to be enough to make a real dent in the debt any time soon.

I have also considered applying for a loan to consolidate the debts as I feel it would be easier to manage one payment and I would be able to see a light ahead in the tunnel knowing when I would be debt free.


I would be great full for any advice, thanks in advance!

StuC75

First off congrats on the decision, every little step helps..

Pay the £100 off whatever is costing the highest rate of interest..

for the OD £13 charge on £1500 facility is appros 0.866% per month. so thats cheaper than what the Virigin money will cost.

Its worth checking out credit file & maybe gauging the 'largely meaningless' credit score.. Now before I get flamed for that, I mean in the context of what these debts mount to - if you've maintained payments and upto date then you are almost the 'dream customer' in that you make the bank a lot of money. The credit file may not be so bad, and you may still have access to balance transfer rates \ life of balance rates that may prove cheaper than the loan rate..

What you need to do (and appear to be doing by cutting up the card) is use this as the turning point.. Too many on here would consolidate and run the debt back up again, so avoid that..

How long is left on the barclaycard & how many months on the virgin one? A loan would have interest from Day 1, and at £8k wouldnt be the cheapest % rate.