Which credit card to repay first

miznak2015

Hey people, hoping someone can give me some advice.


I have 3 credit cards;
1 - M&S interest free until May 2016 - Balance £1950 - Old balance transfer
2 - Nationwide interest free until March 2017 - Balance £2800 - Old balance transfer
3 - Tesco interest free November 2016 - Balance £1700


Now, I use the Tesco card as my main purchase card for work expenses, shopping and so on. I used to clear that in full every month, but then I suddenly realised that it might make more sense to use the money to clear the M&S card earlier as the interest free period ends sooner. I have around £1000 this month to use for repayments, though this varies depending on my expenses and overtime from the previous month. I usually pay £100-£150 each month to clear the other 2 cards.


Sorry if I'm being really stupid asking this question! Thanks for any help.

enjoyyourshoes

Personally I would calculate how much I need to pay per month per card to clear the debt by the end of each of the free interest free periods.


Set up DD for this amount per card and ensure that you can pay this amount per month (the fact that you have debts of £6.5 K suggest you are/have been spending more than you earn)


Then ensure you pay off the monthly CC amount incurred with current spending (or change to paying for this by cash or debit card (as long as you reconcile your bank account daily ensuring you don't get overdraft)

I would review your spending and how you save for irregular bills etc to ensure you are living within your means.


If not there will be another balance transfer of another £thousand or so onto yet another CC with zero interest and zero transfer fee. The mouse will keep spinning the wheel

miznak2015

Thanks for your response, all good ideas.


The £1700 is mostly work related expenses from the past month as I travel a lot, I would guess around £1200-£1300. The other two are much older debts that I've brought down from over double that figure, so definitely now keeping within my budget.


I shouldn't be travelling much this month so hoping the £1700 won't increase any further with work expenses.

japmis

Are you able to do a budget (SOA) to work out if you can pay them all off before the 0% ends?

ViolaLass

Why not pay the minimum and save the rest, for payment just before the 0% deal ends?

CalumHeath

As the above poster has suggested: pay only the minimum amount each month whilst saving an appropriate amount in order to pay off the remainder when the 0% is up. You should be able to increase the amount you can save each month as you reduce the balances (and minimum payments) of each card.

miznak2015

Sorry if this sounds stupid but other than a few quid interest, is there any point in not repaying as much as I can each month? I'm just concerned that if I focus on paying off the cards with the 0% ending sooner, I'll continue using my 0% on purchases and end up with a huge balance on there.

japmis

miznak2015 wrote: »

I'll continue using my 0% on purchases and end up with a huge balance on there.

Why don't you cut them up and then you won't be able to use them?!!

Unless you are spending more than you earn, you won't need them.

Have you done a budget/statement of affairs?

JimmyTheWig

miznak2015 wrote: »

other than a few quid interest, is there any point in not repaying as much as I can each month?

No, the only point is to earn a few quid in interest.
I reckon the Nationwide card alone could earn you just over £100 in interest over the two years before it runs out.

You need to decide whether that's worth it for you or not.
If it would hinder you in actually getting the money together to pay it back then it#s not worth it.

I'm just concerned that if I focus on paying off the cards with the 0% ending sooner, I'll continue using my 0% on purchases and end up with a huge balance on there.

Yes, you'll end up with a high balance on the Tesco card and zero balance on the M&S card.
Once that happens you can switch to paying off the M&S card.

If by using this approach you can pay off all the cards before their interest free periods end then you won't pay any interest.

CalumHeath

miznak2015 wrote: »

Sorry if this sounds stupid but other than a few quid interest, is there any point in not repaying as much as I can each month?

You are correct - other than the interest gains there is little point in not paying off as much as you can each month.

miznak2015

I'm only using 1 of them, and I have to do because I spend £800-£1000 month on travel expenses which I'm paid at the end of the following month. The other cards are cut up so I can't use them.