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!

matttye

Pay off the overdraft first as overdrafts are repayable on demand. If the bank asks you to repay the overdraft and you can't, it will mess up your credit report.

Then pay off the Virgin Money card as you're paying interest on that. You should just make the minimum payment on the Barclaycard and focus on getting the other two down. Although you should try to get the Barclaycard down a bit before the 0% rate ends so you're not too stung on the interest.

I wouldn't get a consolidation loan.. you'll just end up paying more money back and three debts shouldn't be particularly hard to manage.