how best to pay off balance on card/s?

endaf

hello all, i have 2 cards that are within 90% of their limits and am in a position to pay off a large chunk.
Would it be better to show on my credit file to pay off one completely and leave the other near its limit or share it between both cards to bring them under 50% of limit?
ive got a remortgage coming up end of summer, so want my credit file to look as healthy as i can make it.
many thanks for any advice given.

D_M_E

Clear the one with the highest interest rate completely then throw every spare penny at the other one and get that cleared before your remortgage if possible.

endaf

majority of both cards are interest free balance transfers with the rest on both on 10.9% interest, might not be prudent to clear interest free i know but just want my file looking as healthy as possible as im pretty sure with both near their limits its having a negative impact....

Anthorn

In a word "Snowballing" which can be done in two ways and has nothing to do with throwing snowballs at your cards nor the lenders.

My method which I saw in America is to decide how much I can afford each month, pay just a pound more than the minimum payment on each card and then pay what's left of what I can afford at the card with the smallest balance. When that's cleared I go on to the next highest balance and so on until all the cards are cleared and closed.
https://en.wikipedia.org/wiki/Debt-snowball_method

Money Supermarket and MSE do it differently and target the card with the highest APR first regardless of the balance. But it's basically the same snowballing method.
https://www.moneysupermarket.com/money-made-easy/the-easy-way-to-clear-credit-card-debt/

Personally, I follow the first method because it's more structured and the number of cards is reduced quicker. To me the second method is haphazard and the end result of clearing card debt takes longer to achieve depending of course on the balances: For example, it could be that the card with the highest APR is also the card with the lowest balance.

Lastly clearing the card with the highest APR will not work if the APR on all the cards is much the same. In such a case we are left with the first method of clearing the card with the smallest balance first.

[Deleted User]

Target the highest APR card. It's the quickest and cheapest method of clearing the balances.

If APRs are the same, target the one most likely to give future offers.

Naf

Anthorn wrote: »

In a word "Snowballing" which can be done in two ways and has nothing to do with throwing snowballs at your cards nor the lenders.

My method which I saw in America is to decide how much I can afford each month, pay just a pound more than the minimum payment on each card and then pay what's left of what I can afford at the card with the smallest balance. When that's cleared I go on to the next highest balance and so on until all the cards are cleared and closed.
https://en.wikipedia.org/wiki/Debt-snowball_method

Money Supermarket and MSE do it differently and target the card with the highest APR first regardless of the balance. But it's basically the same snowballing method.
https://www.moneysupermarket.com/money-made-easy/the-easy-way-to-clear-credit-card-debt/

Personally, I follow the first method because it's more structured and the number of cards is reduced quicker. To me the second method is haphazard and the end result of clearing card debt takes longer to achieve depending of course on the balances: For example, it could be that the card with the highest APR is also the card with the lowest balance.

Lastly clearing the card with the highest APR will not work if the APR on all the cards is much the same. In such a case we are left with the first method of clearing the card with the smallest balance first.

These are not the same snowballing method, and it is no more structured to pay off based on balance than it is to do it based on APR. Clearing the highest APR first is always the fastest and cheapest way you can expect to pay everything off.


Some people do find the smallest balance method psychologically better and more fulfilling. But as with anything else, your feelings have no bearing on the facts.

Dandytf

Anthorn wrote: »

In a word "Snowballing" which can be done in two ways and has nothing to do with throwing snowballs at your cards nor the lenders.

My method which I saw in America is to decide how much I can afford each month, pay just a pound more than the minimum payment on each card and then pay what's left of what I can afford at the card with the smallest balance. When that's cleared I go on to the next highest balance and so on until all the cards are cleared and closed.
https://en.wikipedia.org/wiki/Debt-snowball_method

Money Supermarket and MSE do it differently and target the card with the highest APR first regardless of the balance. But it's basically the same snowballing method.
https://www.moneysupermarket.com/money-made-easy/the-easy-way-to-clear-credit-card-debt/

Personally, I follow the first method because it's more structured and the number of cards is reduced quicker. To me the second method is haphazard and the end result of clearing card debt takes longer to achieve depending of course on the balances: For example, it could be that the card with the highest APR is also the card with the lowest balance.

Lastly clearing the card with the highest APR will not work if the APR on all the cards is much the same. In such a case we are left with the first method of clearing the card with the smallest balance first.

The lowest balance method you had mentioned worked for me in past and I'm currently considering applying the same method again, thankfuly much less overall less total balance this time.
Cash+ is 1st -less than £100 to clear -one or two payments.
Then 2nd lowest Tesco $560ish -apr not bad@27.5 -I'll determinen what larger than minimum payment I can make (I'll have current min £25 +£10 from cashplus card-I'll probably make the payment up from £35 to £50 per month or more until cleared.
Other cards are high hundreds upto 12 or 1300 -those will be 2019 cards to be tackled once Tesco is cleared.
Thanks OP's didn't mean to nick this thread

molerat

I wouldn't worry about % splits. As you are carrying both 0% and interest bearing balances just pay off as much as you can off the interest bearing ones. Payments will be allocated against the higher interest items by default. Then concentrate on the one that has the earlier finishing 0%.

redux

endaf wrote: »

majority of both cards are interest free balance transfers with the rest on both on 10.9% interest, might not be prudent to clear interest free i know but just want my file looking as healthy as possible as im pretty sure with both near their limits its having a negative impact....

molerat wrote: »

I wouldn't worry about % splits. As you are carrying both 0% and interest bearing balances just pay off as much as you can off the interest bearing ones. Payments will be allocated against the higher interest items by default. Then concentrate on the one that has the earlier finishing 0%.

I agree with this more than the other posts.

In fact I'd say if the amount available at the moment is greater than both the interest bearing balances combined, pay both of those down and hold the rest back for now in the bank or a savings account.

That way, if any new monthly spending is a bit higher than average in the next few months, this reserve can be used to cover that and avoid future interest, instead of having wasted its benefit paying back early against the zero interest part.

As for the credit file, I wouldn't worry about that at all for the moment. Saving money on interest is the first aim for now, then having enough to clear the balance transfers just before the offer period ends.

Anthorn

Naf wrote: »

These are not the same snowballing method, and it is no more structured to pay off based on balance than it is to do it based on APR. Clearing the highest APR first is always the fastest and cheapest way you can expect to pay everything off.


Some people do find the smallest balance method psychologically better and more fulfilling. But as with anything else, your feelings have no bearing on the facts.

And if the APR on all the cards is the same?

I think you missed my point that personally I find it more structured: Paying off the highest APR first for me is less structured because it is less of a goal than progressively clearing the smallest balance first so that all cards are progressively cleared. But what is proven to be better for me might not necessarily be better for someone else.

It is due to the above that I gave examples of both methods and links to explanations of them.

Naf

Anthorn wrote: »

And if the APR on all the cards is the same?

Then it makes no difference, except in each individual person's head. In my case when this happens we pay off from the card in the name of whichever of us has the most total balance on their cards to even things out a little. If both equal APR cards belong to the same one of us, I look at which will save the most against the minimum payment each month, and if that's the same then I go to the card with the lower balance.

Anthorn wrote: »

I think you missed my point that personally I find it more structured.

The problem is that this isn't what you said. You said you personally follow one method, then went on to say that it is more structured, without qualification.