Order of repayment HELP - don't know what to do!

Herbalus

What's the point of doing that? You're paying off £6k on a card (24%) and then putting another £6k on it from another card (26%)? That's exactly the same as paying the £6k to the 26% card! And you save on balance transfer fees.

andyuk01

Personally i would do this a little differently

Pay off the £6600 card completely and setup a new SO to either of the other cards for the same amount the min payment used to be on the now cleared card

You'll be paying out the same each month you are now but with a greater proportion of this going towards the capital rather than just the interest, same with any over payments, just lump them onto 1 card

The danger in the conventional wisdom (pay off highest apr) is that you adjust your expenditure to take into account the now lower min payments

I've always found paying something off completely to be more satisfying than just reducing a balance, it also makes decisions like this easier in the future

Maybe not the most cost effective approach but works for me

<Edit> Also my past experience is that you are more likely to get 0% offers a recently cleared card

Cycrow

sillyme wrote: »

Aha! Precisely the sort of strategic I've been (unsuccessfully) trying to map out myself!
Thank you. The 20.9% card has a limit of £9500 so no room there.

I was thinking, if I paid off the 24% entirely and then transferred £6k of the 26% on to it it could work. Or is that idea COMPLETE nonsense?

Theres no guarnetee that if you clear off the green card that you will get a 0% transfer deal and remember there will also be a fee to pay too.

Ignore the balance transfer idea for now, its unlikly you will get a new card with a 0% balance transfer.

So just pay off the highest APR, and keep focusing on that. If you want to try for a balance transfer later, then it might be an idea to reduce your limit on the card your paying off. Making you have a lower amount of available credit

Paully232000

I would put the £6K on the one with the highest APR, and (presuming you are just paying min payment to everything) carry on paying what you save onto the same card with the highest APR (and more of course if you can afford it).
In other words just because the min payment reduces on the 26% card, make additional payments to this. If that makes sense.

I think any additional money you have should go onto the 26% card until paid off if you cant BT to a lower % card.

bengal-stripe

sillyme wrote: »

No, it'll take a month or two post reducing the overall debt to affect my rating.

Don't kid yourself. It will not take months and a one-off payment, but years of debt reduction and hard slog for your credit ratings to improve. Even if you throw those forthcoming 6k towards one or more of your cards, you still have a whopping 20k outstanding. Who knows, you might go on spending and the cards will be maxed-out again within a few months.

You need a track record of several years of permanent debt reduction to be considered again for any more credit.

mum2one

Current balances:
Blue card – £9100 @ 20.9%
Red card – £11600@ 26%
Green card – £6600 @ 24%

This is what I would do, I would pay the 6k off the green card and the difference between what your paying now on it and the new balance pay that off so you can get the card cleared.

For now I wouldn't close it, the reason I say that is your maxed out on the other cards, - but I would put the card up safe so it becomes an out of sight out of mind but there for an emergency use.

Then when green card paid off -
say for now your min payment is £300 and then green card goes the new min £230 - I would keep the payments to £300, pay off the minimum off blue card and chuck the rest of the red card as that has the highest apr

It could take a year or so for your credit rating to change, so i wouldn't really do anything now in terms of a new card -get these sorted first.

I'd also suggest doing a statement of affairs - incoming v outgoings as there may be savings that can be made - and more money off the cards xx

sillyme

Wow. Bengal-Stripe - pretty blunt reply - if I was a bit more cynical I'd say you were heavily suggesting I was naive

When in actual fact - I've been monitoring my scores for years and mine has regularly moved up and down around 70 points over 2-3 months, as my debt levels fluctuate. Based on these experiences, and some other ongoing repayments, I'm pretty positive it'll improve (maybe not to EXCELLENT but GOOD is still fine for now) in ok time.

I just wanted some advice on how to play with this windfall. I think I've got that now as everyone seems to be suggesting more or less the same approach. Thanks so much everyone xxx

Cycrow

you are naive if you beleive changes to these scores will make any difference

if your hope is that if you can improve your score abit that you wil be able to get more credit, then you're sadly mistaken. Unless you're earning more than 50k your chance of getting any more credit is pretty much 0

sillyme

At the moment, I am. Hence my thinking.

Thanks for all the advice. Have good weekends all!

Bangton

Personally I'd get rid of the £6600 one completely (assuming you can rustle up £600!! in the near future) and then snap it.

It isn't the most cost effective but in the past I have done this and it did boost my credit rating. There is also that sense of achievement in having just 2 cards instead of 3. Then as someone else said, use the minimum payment money from the £6600 card towards the highest interest card!