Payment of credit card or loan

Ziggy3729

Just looking some advice really on what I should pay off first. As not too sure. 

So I had a credit card balance of £3435 with aqua and the interest was high monthly so I have moved £930 to a 0% for 13 months halifax card and also £900 to a 0% for 9 months fluid card.

This will leave a balance of around £1605 on the aqua card.

I also had a loan of £2,000 with 118 money (yes not the best move but anyway it’s done now) it’s for 24 months and I owe £1,137 remaining on that which I pay £142 a
month for. This is due to end with last payment in March. I called to see if there was an early settlement figure thinking I could save some money by paying off early and the quote they give me was £1014. 

So I currently have about £1,100 spare that I can use against these, would I be best to put this toward the aqua card or just pay off the loan and be done with it and throw the payments of that against the credit cards each month.

Also my landlord is selling property at end of month so I need to be out and possibly moving back with parents for a while until I sort somewhere else, so I should be able to save a bit whilst there also. 

Any help/ advice would be appreciated 

[Deleted User]

Pay the highest rate debt.

Shakin_Steve

It sounds like you have been keeping up with your payments, that's good. You should always aim to pay down the most expensive loan first. That's not necessarily the one with highest APR, as a smaller APR on a higher outstanding balance can cost more than a higher APR on a small one. Work out which debt is costing most to service and pay more off that one.
Also make sure you're paying enough off the 0% cards to clear the balance before the end of the offer, or they will become high interest loans too.
You say you have £1,100 to spare, with the prospect of more when you move into your parents. You should be able to clear these debts reasonably quickly. Then one or two credit cards, paid in full every month, and your financial situation will be much more healthy.

Ziggy3729

Yeah I want them reduced as soon as possible. So I think it’s the aqua card then that should be paid first. Followed by extra payments on the loan. But yeah I should have the 0% cards paid off before the offers finish.

as the interest was mostly all taken from the first payments on the 118  money loan. 

Thanks for the help guys 

[Deleted User]

Shakin_Steve said:

You should always aim to pay down the most expensive loan first. That's not necessarily the one with highest APR, as a smaller APR on a higher outstanding balance can cost more than a higher APR on a small one. 

No. The highest APR is always the most expensive, regardless of balance. 

Paying £100 off a debt at 15% will alway save more in interest than one at 10%, no matter what the total balance.

Shakin_Steve

Deleted_User said:

Shakin_Steve said:

You should always aim to pay down the most expensive loan first. That's not necessarily the one with highest APR, as a smaller APR on a higher outstanding balance can cost more than a higher APR on a small one. 

No. The highest APR is always the most expensive, regardless of balance. 

Paying £100 off a debt at 15% will alway save more in interest than one at 10%, no matter what the total balance.

That depends on the length of the loan, surely? Overpaying on a 2% mortgage early on can save thousands in the long run, whereas a smaller, higher APR loan that is further down the line means the interest part of the repayment is relatively small.

[Deleted User]

No. It's simply about the APR on a given sum.

The higher the rate, the more interest that £100 generates. And it generates the same interest each month no matter what the term, or how far into the loan you are.

Shakin_Steve

Ok, I bow to your superior knowledge.

Brie

If you give us the APR for both the aqua card and the loan we could do a calculation for you on both.