Which debt first?

flammable999

I have two sets of debt and I have the opportunity to clear one. Lets assume I have no opportunities to stooze or overpay on either and have no savings

Credit Card - If I clear it, then I do not have to worry about interest after the interest free period ends which is next month. If I leave it, then the APR is roughly 18% and if the minimum continues to come out, then the debt is not being eroded away.

Loan - If I leave it, least I know the fixed amount coming out each month but if I do leave it, I will have paid interest on the whole loan at a rate of 14.5%. In this situation about 6.3k on a loan of 4k. If I clear today, I will only have to pay 4k thus saving myself 2k worth of interest

Both outgoings are currently identical on these two debts. Which one do I clear??

guesswho2000

Seems pretty straightforward, the credit card, since it has a higher APR, unless I'm missing something?

20aday

I'd also clear the credit card debt first.

Once that's been settled in full (including any trailing interest) use the money towards overpaying the loan?

planteria

yes, seems that straightforward..
in this sort of situation then simplifying the position is always a good idea. with no card you can have the loan with a minimum payment in place by DD and then throw every other spare penny you can at the loan too.. the more you pay, the sooner you clear it, and the less interest you are charged.

[Deleted User]

In this case, Card as it's higher APR -

HOWEVER, I think it's worth noting that if the loan APR had been higher, you'd need to give very careful consideration to your overall financial position (including access to savings/money from family/friends, any emergency fund you have/need, your salary etc).

Once a loan is repaid there is no guarantee you will get the fund again. That leaves you with no loan payments but a credit card (is it maxed out?) you must repay.

If you aren't approved for other finance, it'll hit your ability to deal with emergencies. Paying a card down to zero (and not closing it), you can always re-draw the money if you need to in an emergency (just spend on it again).

Primrose82

The card to ensure you don't get into an interest situation