Which is the better option?

amaranth

I'm looking for some advice on paying off debts, as I have a decision to make.

Through foolishness in my late 20s and early 30s, I have around £7,000 of credit card debt across 3 cards and a £10,000 five year loan that's almost paid off. I pay around £200 per month on credit card payments, which is only slightly more than the minimum payment. I pay £206 per month against the loan, and there's only £1,100 left to pay off on that so it'll be done by Autumn.

I recently got a new, higher paying job which gives me £200 more per month. I also just won £1,000 on a lottery scratch card which I intend to use to pay off some of those debts. Which is better - pay off the loan first, or reduce the credit card balances first? I'd love to consolidate those credit cards for a 0% interest one but my credit rating doesn't make that a viable option at the moment.

Kitten868

What would make you feel best? What has the most apt?

I think of it was me id pay off the loan in full and get it closed then £400 a month off the next smallest debt and so on. That's how I stay motivated but it's more sensible to pay down highest interest rate first. You lucky git

andyfromotley

Doesnt really matter too much, any interest saved will be negligible. I'd pay it all off credit cards as you are committed to paying off your loan come what may, so ant be tempted not to put that £200 not towards repayment if you see what i mean.

But if you stick to your plan it really doesnt matter much. You will soon be debt free. Use a snowbal calculator (google it) for the mathmatically correct way to do it.

amaranth

Thanks for the snowball calculator mention - had never seen one of these before, but it's exactly the sort of thing I need!