Which order should I try to pay off my credit cards

Dotty13

I have 4 cards with various interest rates and balances.
The first has a balance of around £4000 with an interest rate of 19.5%
The second has a balance of around £3600 with a 0% interest rate for 15 months
The third has a balance of £1600 with an interest rate of around 34%
The final one has a balance of £600 with an interest rate of around 34%.


I have around £300 each month to go towards the cards, but am confused around which order to try and pay them off.


Should I try and clear the high interest ones first, or try to clear the 0% one?

Willing2Learn

Dotty13 wrote: »

I have around £300 each month to go towards the cards, but am confused around which order to try and pay them off.


Should I try and clear the high interest ones first, or try to clear the 0% one?

MSE logic dictates that you should focus repayments to the card with the highest APR first. By operating your snowball using this MSE method, saves you the most money.

Alternatively, there is the Dave Ramsey method. This snowball tackles the debts according to size, with the lowest amount first. This method lets you see progress quicker, which some people prefer as it gives them a psychological boost.

Just looking at your debts in more detail, it appears both methods will have the same result as your highest APR debts are also your lowest debt amounts.

YorkshireBoy

£300 over and above the total of the contractual minimum payments?

Why on earth would you pay down a debt that's not costing you anything for next 15 months?

Is there a particular reason why you're not BTing the interest bearing debt to 0% cards?

Dotty13

YorkshireBoy wrote: »

£300 over and above the total of the contractual minimum payments?

Why on earth would you pay down a debt that's not costing you anything for next 15 months?

Is there a particular reason why you're not BTing the interest bearing debt to 0% cards?

I think you have answered my query. I have now just moved my 4th card to my 3rd card on a 0% fee, so now only have 3 cards. I will pay the minimum towards the 0%er and card 1, and put as much as I can to clear card 3 as quickly as possible.
I will also look at transferring card 3 to a 0%er later in the week when card 4 has fully moved over.
I think my initial concern was over the best and quickest way to clear my cards using my overall budget of £300 - to clear the 0% within the 15 month timescale because £100 would clear £100 worth of debt, or to park this as it isn't accruing any further interest and concentrate on the highest APR card.

[Deleted User]

Dotty13 wrote: »

to clear the 0% within the 15 month timescale because £100 would clear £100 worth of debt,

A £100 will also clear £100 of debt on the interest bearing card. But the advantage is that it will also stop further interest on that £100.

easterbunni

Dotty13 wrote: »

I think you have answered my query. I have now just moved my 4th card to my 3rd card on a 0% fee, so now only have 3 cards. I will pay the minimum towards the 0%er and card 1, and put as much as I can to clear card 3 as quickly as possible.
I will also look at transferring card 3 to a 0%er later in the week when card 4 has fully moved over.
I think my initial concern was over the best and quickest way to clear my cards using my overall budget of £300 - to clear the 0% within the 15 month timescale because £100 would clear £100 worth of debt, or to park this as it isn't accruing any further interest and concentrate on the highest APR card.

You could also see if you could move your 1st card to the same or another 0% as well, then concentrate on paying off the 0% card that ends first.

redux

Dotty13 wrote: »

I will also look at transferring card 3 to a 0%er later in the week when card 4 has fully moved over.

OK, but you only need to move the part of the card 3 balance that costs interest, £1600 not the full £2200.

Then part of card 1 could be moved to the 0% offer on 3, maybe a bit more of 1 to the new 0% offer.

Have you actually closed card 4? You could use it for current monthly spending, paying it off in full. That can mean interest free on a bit more.

Dotty13

Deleted_User wrote: »

A £100 will also clear £100 of debt on the interest bearing card. But the advantage is that it will also stop further interest on that £100.

True. That's the bit that I am having trouble understanding. I think I am getting there. Pay off the interest bearing ones first.

Dotty13

easterbunni wrote: »

You could also see if you could move your 1st card to the same or another 0% as well, then concentrate on paying off the 0% card that ends first.

I may well do. Although I don't want too many credit cards. I previously organised a balance transfer from card 3 to card 1, but then booked a holiday on card 3!

Dotty13

redux wrote: »

OK, but you only need to move the part of the card 3 balance that costs interest, £1600 not the full £2200.

Then part of card 1 could be moved to the 0% offer on 3, maybe a bit more of 1 to the new 0% offer.

Have you actually closed card 4? You could use it for current monthly spending, paying it off in full. That can mean interest free on a bit more.

This is definitely an option that I hadn't thought of. I haven't closed card 4, and probably wont as I want to increase my credit score. Reducing balances on credit cards seem to have an impact on this. I don't want to spend any more on credit cards - seeing the balances written down is quite scary and I would like to be in a position in a few years when I have no credit card debt.