Which CC to pay off first? Not so obvious....

Smart77

Hi Everyone

My OH has had quite a lot of debt - £30k+ :eek: I have managed to get most of it onto 3 0% credit cards. Common sense would dictate that he should aim to pay the one that finishes soonest off first, but he will still have debt on it at that point which will then revert to 23.9%.

I am wondering whether he throws all the money that he can at one of the other cards, so reducing the balance hoping he will get a 0% balance transfer offer which he can then use to pay off the card that expires first, or whether he applies for a new 0% card in the summer - I'm not sure with the level of debt and number of cards whether the second option will work.

He has £2000 from a 0% money transfer (from one of these cards) and £185 from a loan repayment which ends in March which he can use to pay off a card. Currently he is only paying the minimum on all cards, and other than the above does not really have much more he can repay.

The breakdown is -

B'card £8,609 limit 10,700 0% exp Jul 2014 min payt 172
HSBC £6,802 limit 7,000 0% exp Oct 2014 min payt 170
MBNA £6,400 limit 7,200 0% exp Nov 2014 min payt 64

What are your thoughts / views please.

Thanking you all in advance

Smart77

opinions4u

Pay £1 over minimum payment now. That will, potentially, enhance your credit file.

What are the rates after 0%?

Smart77

B'card 23.9
HSBC 23.4
MBNA 19.2

But want to try to avoid any of them going onto paying interest. With paying £1 over the minimum, would that be every month, and would that really make that much difference to getting another 0% offer?

Thanks

opinions4u

Smart77 wrote: »

B'card 23.9
HSBC 23.4
MBNA 19.2

Pay highest rate first.

But want to try to avoid any of them going onto paying interest.

There is always a risk that you won't achieve this. So reducing the debt on the highest rate faster reduces future costs. You could potentially stooze the extra money in a savings account until just before the 0% expires. But you need to be disciplined.

With paying £1 over the minimum, would that be every month, and would that really make that much difference to getting another 0% offer?

Credit files show a minimum payment marker each month. That extra £1 will remove it. A minimum payer can be seen as higher risk. I can't say if it will make the difference between obtaining a 0% card or not. But it is a small price to potentially move the odds a bit more in your favour.

If he has little spare cash he needs to be aware that his minimum payments will increase as an when interest starts being charged.