Help please! I don't know how to snowball these debts

Seaxwyn

Hi there,

Following a balance transfer my debts now look like this:

• Sainsbury's CC @ 5.94% LOB - £2794.12
• M&S CC @ 3.94% LOB - £3883.42
• Egg CC @ 0% til May 08, then 16.9% - £5470.5
• A&L overdraft - 0% til Nov then 5.9% - today £3203 but contantly changes (limit £3750)
• NatWest loan @ 7.8% - £386.86 pcm, 67 payments to go. (can make overpayments but have to pay fee of 2 months interest each time)

I usually manage to pay a small amount over the minimum payments. Where should I pay this?

The Snowball calculator says to put it onto the Egg card. However I am pretty sure I can transfer this balance again before the interest rises next May.

So should I pay the Sainsbury's CC, as it's the highest-interest easiest-payable debt?

Or should I save the money (I have an ISA at 5.3%, currently empty) and use that to make overpayments on the loan - in which case, how much would I have to save to make it worth incurring the fee (£172 as of this month)

I'd be really grateful for advice as I want to get these darned debts paid off as quickly as possible and can't work out what's the best thing to do

oliveoyl

How much was the Natwest loan originally for - how much is the 2 months interest fee?
If you haven't paid anything into your ISA this financial year, you can start another paying a better rate of interest than that if you do decide to save a chunk.
sorry I'm not more help.

chevalier

Hi Sea
The nearest one in time to going back to paying interest is your overdraft. So perhaps it would be a good idea to pay that off as much as possible? It you have little on it when the 0% term ends then maybe you can negotiate a good rate for it if you have been in credit?

The terms for overpaying on the loan seems pretty pernicious to me. It means you pay £700 ish for the privalage of paying THEM some extra money! I would think you would have to have a pretty big stash of money ready to make paying that worth while. It may be worth checking whether the amount of interest you have to pay to do an overpayment, goes down with time. So it may be two months now, but might be less in the future!

cheers
chev

Seaxwyn

HI Olive and Chev

Thanks for your advice.

The loan was originally for £25,000, taken out over 7 years. I've paid 17 of 84 payments so far.

I have now found out that the fee for overpaying on the loan would be £172 as of this month and it decreases each month (though it is always two months interest. Also they apply that charge at the end of the loan term, not in the month you make the payment (so you don't pay interest on the charge.

I will research a better ISA - I have only paid in the £1 to open it. If you have suggestions, please tell me, but I'll look on the 'savings' section of this board.

Even when the OD rate increases, it will still be (just) lower than the Sainsburys CC, which is why I thought that might be the one to pay first. The overdraft fluctuates wildly but I do want to get it lower as I find it demoralising always having such a big overdraft.

lynsayjane

hiya sea
if you are sure that you can get a bt for your egg card next year then I'd suggest concentrating on either the od or the sainsburies card, these being your two lowest debts. You'd get a huge psycholocigal boost from being able to cancel one or the other of these.
afraid thats all the help I can give you sweetie xx

Karmacat

Hiya
It looks to me like the Sainsbury's CC should be the one you overpay on, as its the highest rate thats easily accessible to overpayments. Or maybe a combination, for psychological reasons - get your overdraft down to where its pretty regularly below £3500, and *then* whack it at Sainsburys.