Which debt to pay first?

yetanotherdave_2

Hi, I've been fighting back against my debt for a while now, since a spectacularly bad flat purchase and sale left me £30k down, mostly on credit cards. I've got this to £13k now, with £5k of it being interest free till December and the rest 6.9% for life. I've got this far by cutting expenses (like tv license/tv packages, cycling to work to save fuel, cancelling non essentials) I've been shifting debt around and focusing on the higher interest accounts first, but I've just had a realisation that could change my tactic.

I discovered I have £1400 of student loan left (I thought this was much higher, but as it comes out of my wage and I never see it, pretty much ignored it, especially as it's so low interest). However this debt costs me £110 a month. This means it'll be done and gone after 13 months, however:

If I pay £1400 towards my 6.9% for life card it'll make a monthly outgoing difference of around £30.
If I pay out £1400 from my overdraft to clear this student loan it'll cost me around £15 a month interest charges.

Essentially because of the higher capital repayment clearing the lowest interest debt first makes the biggest difference to my monthly outgoings. So, is this a case where paying the lowest cost debt actually makes sense?
The final factor to consider is that the interest free balance ends in December (it'll be £4k by this point with my minimum payments), at which point it becomes a colossal 27.9% debt! I want to make sure I have the ability to balance transfer whatever I haven't been able to clear down before this happens. Any advice? Has anyone done it this way before?

andyfromotley

i guess it depends on how confident you are that you can transfer the 4k to another 0% or low rate card? If not then i would definitely pay this down as 29% is gonna be horrific!!

I'm confused as to where the £1400 is coming from?

yetanotherdave_2

The £1400 would come from going into my overdraft, it'd cost my about £15 a month. The overdraft is also my last resort option to pay off the 27.9% card, but I'll have other options like employee share save scheme shares that become eligible for sale that should be in the region of £3k.

yetanotherdave_2

I phoned the student loans people today to double check the balance and ask a few details, the balance was from last tax year, after my deductions from this year it will be gone entirely by March! So I wont repay early and will look foward to putting that extra cash towards the higher interest cards. Thanks for your help.