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??

lee111s

The one with the highest interest.

mwarby

Worth also considering your wider circumstances, if you may struggle to repay the other and one is secured on something you need(say car) using all the money to repay an unsecured loan may not best route.

If your unlikely to struggle and this is pure moneysaving, then highest rate first unless there are significant early repayment charges

Super_Whiskey

Explore your options and see whether you can transfer your credit card to another 0% balance one and if you can then pay off your loan. If you can't then depending on the balance then you'll need to work out which will cost you more over the term of the loan.

Anthorn

flammable999 wrote: »

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??

Looks hyperthetical to me.

Given equal circumstances to clear debt I will always go for the one with the lowest balance first because that will be quickest to clear. However there is a case for going for the one with the highest APR if the aim is to keep the debt but reduce outgoing interest.

kidmugsy

Change of mind; just clear the more expensive one first.

HappyMJ

flammable999 wrote: »

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??

Credit card. If you pay it off you can borrow on it again.

bobobski

HappyMJ wrote: »

Credit card. If you pay it off you can borrow on it again.

I would say that's a good reason not to clear the credit card first. Depends on OP's objectives, of course.