Best way to use a bit of spare cash to pay off debt

Mrs_T_13

Hi there,

I have just received a small bonus and want to use it to best effect to pay off some debt.  I have one credit card where I'm paying interest and one which has an interest free period that runs out on 30 September.  Which card do I put the bonus onto?  Sadly it doesn't fully cover either amount, but just wondered what the best use of the cash is in terms of my credit reference (currently excellent)?    I may need to apply for another interest free card soon, so this needs to be taken into account too. All advice gratefully received.

[Deleted User]

You will save more on the highest APR card, whether that's the one currently paying interest or the other one

Either way taking a chunk off your debt makes you look better for a future application for credit but the balance being held and paying interest makes you look worse. Your excellent credit reference unfortunately means nothing as no lender ever sees it and logically if you cannot afford to pay off cards in full and are paying interest every month, you could not be excellent anyway

MovingForwards

How much is outstanding on each and what's the APR on them, including the one which is currently 0%.

Ignore the rating and number given by credit reference agencies as they're not seen or used by financial institutions, it's the underlying data eg payments made on time, not late or missed, no CCJs, IVAs etc.

Brie

generally, rates for cash withdrawals tend to be highest and amounts owing on balance transfers are often lumped into this.  But this will be different for different card providers so while Barclays or MBNA might charge me 23.9% for the balance owing on a lapsed BT a card like Vanquis or some others may be charging 39% on purchases.  It seems the farther away from a mainstream bank you get the worse the rates are.  So - check the different rates.

And if you have an issue with clearing the debt you might find some assistance on the debt forum - lots of ideas on how to get things sorted.

[Deleted User]

I suggest you pay off your highest rate then consolidate the remainder at the lowest rate available to you. 

1. Check if any existing card is offering balance transfer deals.
2. Consider new credit card/s if your credit situation permits.

Mrs_T_13

Useful info.  Many thanks.