Best method? - Big to small or vice versa

eng1991 · 15 June 2022 at 4:29PM

1. £6170 - £400 of which is on 3.9% until 10/01/2025 and the rest is on 0% until 26/03/23

2. £3400 - 21.9%

3. £2600 - £830 at 17.48%, £574 at 19.17% and then £1250 at 0% until 31/07/22

What is the best way to tackle this? Would it be pay off the £3400 first as it is at the highest rate?

Would have £500 a month left over after all expenses to pay off the debt

Appreciated

RAS · 15 June 2022 at 7:51PM

Pay off the highest rate first, check out "snowballing." That way you can see the effect of making payments on the total you re-pay and the length of time it will take to get debt-free.

EssexHebridean · 15 June 2022 at 7:57PM

As an addition though, assuming you’re not still using any of the cards, set the monthly payment to be a little above the current minimum. So if the minimum monthly payment is £67.83, set it to be £70 monthly instead. You won’t notice the loss of the difference, and it means that each payment clears a little more of the capital balance than a standard diminishing minimum payment would. You should never do this on a card you’re still using, but it can be a great way of “stealth debtbusting” on cards you’re not!

TheAble · 15 June 2022 at 11:49PM

I also would go for the £3400. It's hard to make a case for the others.

There is occasionally a scenario where it can make sense to pay off cheaper debt first if it's on a promo which is soon to expire, with a subsequent high revert rate. But given the £3400 is already on a high rate it would seem to make most sense to tackle that first.

Hippycamper · 16 June 2022 at 12:04AM

I agree with the 21.9% being first, is there an interest free card available that you can amalgamate the whole interest part of the loans.

virgin do a interest free tick card for 20 odd months and ruthlessly pay this £10k off once and for all

good luck

enthusiasticsaver · 16 June 2022 at 8:17AM

Can you not balance transfer No 2 card and maybe No 3 at the same time? If not you should tackle that first. Set the other two for slightly above minimum until another 2 card gone.