Small wins vs Sensible debt repayments

Toonsy

So I'm tackling my debt and I've sort of got it all sorted out in my head and using various tools available on here.

The short story is that I have spare money now to throw at debt so I can start reducing it rather than treading water.

However it will take time and I do have a bit of a dilemma.

I do understand paying off higher interest accounts first but is it sometimes better to go for a quicker win rather using sense?

For example the snowball calculator suggests I throw everything at a CC with £2900 balance at 29.9% interest. The minimum payment is approx £80 and I pay £100 each month. I have £270 a month saved from a recent remortgage and also put away about £150 à month into an emergency fund so say I divert that I can throw an additional £400 a month at it so within eight months or so it is clear.

However i also have a bank loan with roughly £6000 left to pay at 4.7% interest and I pay £330 à month on this. If I chuck the extra £400 at this it'll again be about clear in eight months.

The first scenario makes more sense because of the interest but the second scenario would give me over £700 a month 'spare' as opposed to £500 'spare' with the first option. It would then only take four months to clear that card then I have £800 each month to throw at the next one etc etc.

So what would you do?

EssexHebridean

Work out the interest that will rack up on the first one over the time it takes to clear the loan. Balance that against any "front loaded" interest that would be refunded on the loan if it were cleared early. That tells you the best financial scenario.

Personally I;d leave the loan ticking over I think, although without a full picture it's tricky to say for sure.

Toonsy

You touch on something I've really struggled to work out.... paying off a loan early that has front loaded interest. How do you calculate interest saved?