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What to pay off first
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hrj2922
Posts: 28 Forumite
I have the following debt-
£1740 overdraft (2 seperate banks, 1 x £1000 and 1 x £740)
£500 credit card
£200 credit card
£450 parents loan
The overdrafts have a total of £20 charges a month
The credit cards I think are £5 min payment
Obviously no interest on parents loan and they’re not pushing to get it back but I don’t like being in debt to them?
Please no judging about the debts... I’m hoping to be out of them all in 1 year
£1740 overdraft (2 seperate banks, 1 x £1000 and 1 x £740)
£500 credit card
£200 credit card
£450 parents loan
The overdrafts have a total of £20 charges a month
The credit cards I think are £5 min payment
Obviously no interest on parents loan and they’re not pushing to get it back but I don’t like being in debt to them?
Please no judging about the debts... I’m hoping to be out of them all in 1 year
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Comments
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You need to give more information really. Start off with finding out the APRs.Savings as of April 2023 Savings account - £26460.50(14474.88)Current account - £2140.24(4576.79)Total - £28600.74(19051.67) £1010 (£65pm CS/BS) £250 CS/BS/JS0
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Yes, definitely find out the APR as that may influence what you pay off first, but having said that, if you're getting charged £20 each for those overdrafts then I'd probably aim to pay those off first as (an ordinary) credit card won't be costing you that in interest at those balances.January grocery challenge £111.35/£4000
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Please no judging about the debts... I!!!8217;m hoping to be out of them all in 1 year
The average household in the UK now owes a record amount of £12,887 unsecured debt
Or put another way, People in the UK owed £1.576 trillion at the end of January 2018.
No judgement here.I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter0 -
Your debt isn't that high don't worry.
If I were in your situation, I'd pay the smallest first. It will keep you motivated. The snowball method is a good plan for debt like yours. Yes Apr / charges etc but that didnt stop us getting in debt did it! You need a method that's quick and keeps you pumped up so you see it through. Do an income and expenditure and see how far you can cut back to get this paid off as soon as you can.0 -
I would pay them off in order of :
1)£200 credit card
2)£500 credit card
3)£740OD
4)£1000 OD
5) Bank of mum and dadPaid off the last of my unsecured debts in 2016. Then saved up and bought a property. Current aim is to pay off my mortgage as early as possible. Currently over paying every month. Mortgage due to be paid off in 2036 hoping to get it paid off much earlier. Set up my own bespoke spreadsheet to manage my money.0 -
The £500 credit card (Halifax) is 12.95% PA
The £200 credit card (capital one) is 34.9% PA (shocked by how much this compared to the Halifax one! I got this credit card when I was pretty desperate and it was the only one I could get quickly/with my credit score)
The overdrafts are £11 for the £740 one (Co-op) and £9 for the £1000 one (first direct)
With the credit cards if I pay the minimum payment (£5) each month will I still get charged interest?
Looking at this I think it’d be best to pay back the capital one card first - as it’s only £200 I’ll be able to do that next month. Maybe then my parents. Then the Halifax card then the overdrafts? Does that sound like a good idea?0 -
My choice would be
1. pay off Cap One
2. Pay off COOP overdraft
3. Pay off Halifax
4. Pay off First Direct
5. Pay off parents.
I would also try and make more than the minimum payments if at all possible - making min payments means the interest will be going up and up with not very much going off the sum owed and yes, the interest added will be the highest possible as you are only making min payments and it gets added to the total.
The only way I know to avoid interest being added is to pay it off IN FULL as soon as you get the statement.0 -
The only way I know to avoid interest being added is to pay it off IN FULL as soon as you get the statement.
True but he could get all the CC stuff put onto a 0% interest free balance transfer card and work on it from there, at least not accruing any greater debt?January grocery challenge £111.35/£4000 -
Pay off cap one first.
Can you pay off Halifax the following month?
Pay those two off asap. Cut them up now and don't spend any more on them.
Getting another credit card for a 0% transfer is not the answer. Another credit card is not the solution to the debt, especially for a £500 balance transfer.
I would be inclined to pay back the parents after that and then the overdrafts. Perhaps it doesn't make sense in terms of interest but it feels more right.
How much do you have available to pay off debt each month? It would feel really good if youcould get rid of those credit card debts over the next 2 paydays. It'll only work if you don't spend anything else on them though.
Look up the snowballing method that Firefly mentioned. It does seem to be the most effective way of getting rid of debt.0 -
Bear in mind that you will have trailing interest to pay on the CCs the month after you've paid them off.
When one debt is finished, use that payment against the next along with the minimum payment you were already making each month.
This is easily do-able in a few months with some focus.I’m a Forum Ambassador and I support the Forum Team on the Budgeting & Bank Accounts, Credit Cards, Credit File & Ratings and Energy boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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