Clearing some debts

davidpollard1

I have received a cheque for £6750, and want it to help either clear some debts or pair some debts down. my debts are as follows. how should i attack it. pay one-off and a bit of everything else spread it across the board? any suggestions greatly appreciated

MBNA
£3,944.55 Current balance
£54.21 per month

paypal
£889.87
£27.14 per month

Tesco Loan
£2480
£209 per month

Lloyds credit card
£7651.07
£182.00 per month

Socajam

davidpollard1 wrote: »

I have received a cheque for £6750, and want it to help either clear some debts or pair some debts down. my debts are as follows. how should i attack it. pay one-off and a bit of everything else spread it across the board? any suggestions greatly appreciated

MBNA
£3,944.55 Current balance - put the balance on this which would leave £564.42
£54.21 per month - this would increase to £290.35 - paid off in 2 months

paypal - Clear this
£889.87
£27.14 per month

Tesco Loan - I would clear this
£2480
£209 per month

Lloyds credit card - £472.35 per month including the 182 to pay towards this month which would mean you have16 months to clear this debt
£7651.07
£182.00 per month

This all depends on what the interest rate is on the debts? If they are low, I would do as above, if they are high, I would get rid of the highest rate first.

MovingForwards

Are you in a debt management plan are are these just regular debts ie paid on time and no issues?

The advice will differ but assuming they are regular debts I would clear the MBNA, PayPal and the remainder off Lloyds. That way you see two debts go, your last CC is reduced and your loan is fixed payments.

Alternatively, clear the loan, MBNA and the rest on PayPal as you will then have more in your pocket each month to pump into the Lloyds CC.

Could you confirm if they are / are not in a debt plan?

Others will ask for APR on the debts, so you may want to add that info.

davidpollard1

these are regular monthly debts that i want to clear so i either have more money left out of my wages for other things or can use to put more against another debt

MovingForwards

And what are the interest rates?

davidpollard1

Good Morning

the interest rates for each is as follows

MBNA 4.94% until 13/12/22 then 8.89%

Lloyds 19.9%

Tesco 3.5419%

Paypal 19.9%

SusieT

davidpollard1 wrote: »

Good Morning

the interest rates for each is as follows

MBNA 4.94% until 13/12/22 then 8.89%

Lloyds 19.9%

Tesco 3.5419%

Paypal 19.9%

With the big difference in the interest rates, I would clear Paypal, put the rest into Lloyds which will give you under 2000 remaining on that. Then pay Lloyds down at £200 a month, you will see the balance drop faster, save a lot of interest and can hopefully have that gone, roll the payment into MBNA and have it paid down before the low rate expires. When the cards have gone hit the loan.

fatbelly

Yep - Susie's got it. Kill off as much interest as you can.

With what is left on the Lloyds card I'd look to do a 0% balance transfer

https://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards/

then aim to pay that down to zero balance by the end of the interest free period

davidpollard1

so what ill do this afternoon is pay off Paypal and whats remaining ill pay a lump sum off the Lloyds credit card, if that's the general consensus.

fatbelly

That seems to be the most effective way of using your money. If you saved it you would be lucky to get 2% interest

davidpollard1

or should i pay off paypal £27.14 per month the tesco loan £209 per month, whats remaining pay off some of the lloyds credit card that will leave me £236.14 per month extra to add to my new lloyds credit card minimum payment