Can anyone give me advice on which debt to pay first?

Cat_girl_2

Hi all who read this...
I am hoping someone can give me some advice.
For reasons I won't go into I have a large amount of credit card debt and am determined to start to pay them off as quickly as possible. I when I took the balance transfers I didn't realise how high the payments would go when the 0% deals ran out and now for reasons I won't go into I am stuck.
I owe:
CC1 - £7456. Interest free period runs out June 2016 goes to 20%
CC2 - £7504. Interest free period runs out May 2016 goes to 18%
CC3. - £5756. Interest 11% minimum payment £125 pm currently
CC4. - £4464. Interest free period runs out March 2017
I have £ 850. Per month to split between these debts, I am worried that the interest accruing when the 0% runs out means I will never be able to pay them off.
Any advice on how to start clearing these or which order to pay would be great as I'm losing a lot of sleep over this mess at the moment and don't know what to do for the best. :(:(:(
Thanks for any replies in advance

theoretica

You need this calculator:
http://www.stoozing.com/calculator/snowball-calculator.php

[Deleted User]

3 then 2 then 1 then 4

LionessInWinter

I agree with woodbine, pay the minimum on all of them except on cc3. You should concentrate on this one because you are paying interest on this one. On cc3 you need to pay the remainder of the £850, then when that one is paid off, do the same for the next one which should be cc2 and so on.

Cat_girl_2

Thanks so much guys. I just don't know what to do at the moment. I've been deluded and blind to this for a long time and I fell physically sick when I actually stopped trying to convince myself it would go away.
The thing that bothers me is the interest that will be mounting up when the deals run out and I can only pay the minimum.
I work very long hours and don't have much time to earn extra to pay off but I'm going to see if there is anything I can do.
I've budgeted as far as I can.

Thanks xx

northerner999

Put every effort into repaying the only one that is currently charging interest, then come March/April you may find you have more options. With a honest SOA and thorough review of your finances you may be surprised at just how much you can pay off in six months.

I say to review early next year as it is not so clear cut on which of 1&2 to pay off first, as the higher interest rate on 1 would tempt me to rarest that over 2. Regardless, for now the aspiration should be to get cc3 reduced as much as possible over the coming months.

CC4 is something you should almost forget about, just keep making minimum pay,nets and ensure you make progress on ones which will cost you interest now or imminently.

DandelionPatrol

woodbine wrote: »

3 then 2 then 1 then 4

LionessInWinter wrote: »

I agree with woodbine, pay the minimum on all of them except on cc3. You should concentrate on this one because you are paying interest on this one. On cc3 you need to pay the remainder of the £850, then when that one is paid off, do the same for the next one which should be cc2 and so on.

This is the conventional wisdom of paying highest APR first applied to the APR at the present moment.

However, the situation is complicated by the interest free periods. I believe that it will cost least overall - and clear the debt quickest in this particular situation, to put the £850/month to the first debt immediately, despite it being at 0% until June [or slightly better, put it into a savings account until then].

The reason is that if it is put straight to the 11% debt, the money is effectively relieving interest at 11%, for the life of the loan on its original repayment schedule [ie paying minimums], whereas if it is put to the first loan, from June it will relieve interest at 20% for the life of that loan on its original schedule

northerner999

If you are going to be unable to find 0% switches, remember you may still be able to reduce the interest rates on 1&2.

http://www.moneysavingexpert.com/credit-cards/cut-credit-card-interest

Cat_girl_2

Thank you so much for this, this is what I was unsure of. Go for the one with interest accruing now... It's the MBNA 20% interest that worries me 😔.
So, pay all the minimum payments until June and put the surplus £330 into a savings account until then and go at that one first...
What a mess I can't believe how naive I've been.:(:(

Cat_girl_2

Wow:T, this is great. I didn't realise I could do this, thanks so much for pointing me in this direction. I will have a good look at Martins tips and see what I can do. I think the main thing is to spend a good hour looking at this and writing a plan down.
I feel much better now:)

HappyMJ

It appears your credit rating is very good so you could consider applying for another 0% on balance transfer card so transfer the interest charging debt onto another 0% card.

I would wait at least 3 months between applications so it doesn't hurt your credit rating too much. It will affect it but it should take about 3 months to recover.