Clearing card debts - the best way to go?

dr_moomoo

Hi everyone

I recently received an unexpected windfall of £1k. I'm determined to use every penny of it to clear off some of my credit cards. These are what I have so far:

Storecard 1: £308 (29%)
Storecard 2: £225 (29%)
Egg: £769 (17%)
Natwest: £872 (interest free for 9 months)
Post Office: £681 (v low interest, about 2% as on balance transfer only)

I pay off £25 a month to each card apart from Egg which I pay £33 off to. I've cleared Storecard 1 this morning, so I have £692 remaining. My goal is to clear debt but also free up a bit more cash for me as I am horribly strapped once all my debt repayments go out! I can either clear most of my Egg card, but still have some repayments to make, or clear my Post Office in total - but this is a lower interest rate. Option 1 would mean I am *almost* clearing something with higher interest, but still leaving me short of cash for a few months until I've cleared it - while option 2 would mean I have cleared a lower interest card altogether, leaving me an extra £25 a month in pocket and one debt less.

I am due a rebate of about £200 in either October or November which I will be using to clear storecard 2 I think, so that one is covered for the moment.

Sorry for the long post - I would appreciate any views on the best thing to do with the remaining £692!

Many thanks!

mrsspendalot

personally I would clear your storecard 2 and pay the remainder off egg, as storecard 2 has the higher interest

shell_girl

What about using the whole £692 on the Egg card and then BT the remainder onto the Nat West card? That way you've cleared a card and have £33 extra per month to hammer down Storecard 2. I know you said that you're due £200 in October/November but you'd be better off clearing the highest interest cards first.

This is what I would personally do as the windfall was 'unexpected' and so just a couple more months of being horribly strapped and you've cleared your three worst debts in terms on interest. Then you're plain sailing to clear the low interest debts.

Congratulations by the way!

dr_moomoo

Thanks for your replies! I don't think I have enough room on the Natwest to BT any more over. I thought of paying the store card off now, leaving me about £400 to put onto Egg, I preferred the idea of clearing a whole card - or as much as possible - with a larger sum, if you know what I mean...

LOL that's one vote for each so far!

Thanks for the congratulations! I'm determined to be sensible with this money and get myself sorted. I'm lucky to have had it.

penguin83

Personally I would pay off the higher interest one first as that way you will pay back less overall. Put the figures into the snowball calculator and see what that suggests.

Mind you its a great morale boost clearing the smaller ones as well.

Im undecided now!

southernscouser

Have a look at this little calculator. It will tell you how much you will save in interest by paying off the highest APR debt first and you can then compare that to the satisfaction/boost of clearing a card completely.

(Land_of)_Maz

Ask them all for settlement figures, you might be able to knock a bit off and make the remainder go even further......

I would pay off storecard 2 now anyway, just cause i like chalking off debts! A zero balance is a wonderful thing! Then put the remainder into the Egg, that'll hardly leave anything, you could always use your next windfall to clear that completely.

(did anyone spot the absolute lack of maths here, i really should be more specific!! So not s DFW Nerd!!)

sammiboo

You try and call Natwest and see if they will up your amount and then cancel your other cards. I have got Egg to up my amount when I wanted to transfer money. They will get a little bit of interest from the transfer so its worth their while if you have been keeping up your payments.

dr_moomoo

Thanks for your responses. I've only just got the Natwest card, as a transfer, so can't up the limit or transfer any more onto it, unfortunately.

I did the calculator thing, thanks, and my interest payments would be about £186 apparently, which could be worse ... I am thinking clearing the store card and then as much of the Egg card as possible is the way to go? And then when I get the £200 rebate, I throw that at the Egg card too. If I pay off the Egg card, I've still only technically cleared 1 debt, as there'll be £100 outstanding on it...

Kevicho

dr_moomoo wrote: »

Hi everyone

I recently received an unexpected windfall of £1k. I'm determined to use every penny of it to clear off some of my credit cards. These are what I have so far:

Storecard 1: £308 (29%)
Storecard 2: £225 (29%)
Egg: £769 (17%)
Natwest: £872 (interest free for 9 months)
Post Office: £681 (v low interest, about 2% as on balance transfer only)

I pay off £25 a month to each card apart from Egg which I pay £33 off to. I've cleared Storecard 1 this morning, so I have £692 remaining. My goal is to clear debt but also free up a bit more cash for me as I am horribly strapped once all my debt repayments go out! I can either clear most of my Egg card, but still have some repayments to make, or clear my Post Office in total - but this is a lower interest rate. Option 1 would mean I am *almost* clearing something with higher interest, but still leaving me short of cash for a few months until I've cleared it - while option 2 would mean I have cleared a lower interest card altogether, leaving me an extra £25 a month in pocket and one debt less.

I am due a rebate of about £200 in either October or November which I will be using to clear storecard 2 I think, so that one is covered for the moment.

Sorry for the long post - I would appreciate any views on the best thing to do with the remaining £692!

Many thanks!

Id clear both storecards, so you have 467 left, pay that amount off the egg leaving you with a remaining balance of 302 on there.

Remember you also now have an extra 50 quid a month now, after paying off both storecards, so thats a possible 85 a month you can use, to clear the egg in 3 months (see note below)

Then you might as well save up to pay the Natwest before you accrue interest (as it will likely rocket).

Also might be worth seeing what you can do with the egg card, (ie anniversary offers), if nothing get rid of them.

Also cancel the 2 storecards, will be better on your credit report (will take a month of two to show as cancelled)

Just a note

To clear off the debt in 4 months you could pay 76 a month, it will ease your outgoings a little by 9 pounds.
Or you could use the full 85 and then the last month (month 4) will be for 48 pounds

Good luck

sammiboo

dr_moomoo wrote: »

Thanks for your responses. I've only just got the Natwest card, as a transfer, so can't up the limit or transfer any more onto it, unfortunately.

I was on 16% interest with egg and I told them I wanted to transfer my outstanding balance onto another card who was offering a better rate.

They came back to me with a low rate. They would rather me pay a low interest than lose me altogether so try that. The worst they can say is no.