Help deciding how to pay off credit cards

stacey9292

Hi all, 

I have 3 credit cards and my initial plan was to pay off the card with highest interest however; my thought process has shifted slightly and just want some advice. 

Credit card 1: £1,167.00 left to pay with APR 43.448
Credit card 2: £392.00 left to pay with APR 41.590 
Credit card 3: £720.00 left to pay with APR 30.340. 

I pay money off them all each month and plan on making additional payments on one at a time until they are all finished. My first plan was to pay off credit card 1 monthly with the extra payments which will take me around 5 months however; I have a little extra money coming in this month and was considering paying off credit card 2 all at once and then it's just 2 credit cards left to pay off. 

Do you think I should stick to paying off highest APR or close off the one with the lowest balance first and then start on the highest APR? 

thank you for your help all

MorningcoffeeIV

Highest APR first. Unless card 2 is one known for BT offers.

penners324

Clearing off a card can have positive feelings for you. But a purely financial 1 it's highest Apr first

CliveOfIndia

Well you're right, in terms of cold hard cash it makes sense to prioritise the one with the highest APR, no question.  However, there's not a huge difference between the first 2 cards in terms of APR.  And there is a psychological "feel-good" effect when you've cleared a debt completely.  So if you wanted to clear card number 2 completely, it would make only a small difference in terms of the overall money you're paying.  Hopefully, you would then divert the monthly payments that you were making to card 2, towards card 1 - as well as any additional payments you're able to make.

You could potentially look to see if you'd be eligible for a 0% balance transfer offer, which could save you some interest.  Although, for relatively small sums such as yours, and if you'll be able to clear the larger debt in 5 months anyway, there may not be a huge amount to be gained.  Especially if there's a BT fee to pay.

grumbler

It's worth checking card 2 and 3 accounts for BT/MT offers.

enthusiasticsaver

I would clear the smaller CC2 first as the interest rate is more or less the same as CC1. You may then be offered a 0% deal. 

stacey9292

CliveOfIndia said:

Well you're right, in terms of cold hard cash it makes sense to prioritise the one with the highest APR, no question.  However, there's not a huge difference between the first 2 cards in terms of APR.  And there is a psychological "feel-good" effect when you've cleared a debt completely.  So if you wanted to clear card number 2 completely, it would make only a small difference in terms of the overall money you're paying.  Hopefully, you would then divert the monthly payments that you were making to card 2, towards card 1 - as well as any additional payments you're able to make.

You could potentially look to see if you'd be eligible for a 0% balance transfer offer, which could save you some interest.  Although, for relatively small sums such as yours, and if you'll be able to clear the larger debt in 5 months anyway, there may not be a huge amount to be gained.  Especially if there's a BT fee to pay.

Thank you for this info. Another question for everybody if youd dont mind. 

So with my current plan I will be credit card free in August. 

As well as doing this I an also saving money for a trip in October. Would you all advice me to keep to my original plan OR stop saving/reduce the amount I'm saving and clear my credit cards faster? 

MorningcoffeeIV

As long as you have emergency savings, stop savings. 

Otherwise your effective borrowing money at 40% to go on holiday, which is bat-poop crazy.

Go on holiday when you have some spare money to do so.

MattMattMattUK

stacey9292 said:

CliveOfIndia said:

Well you're right, in terms of cold hard cash it makes sense to prioritise the one with the highest APR, no question.  However, there's not a huge difference between the first 2 cards in terms of APR.  And there is a psychological "feel-good" effect when you've cleared a debt completely.  So if you wanted to clear card number 2 completely, it would make only a small difference in terms of the overall money you're paying.  Hopefully, you would then divert the monthly payments that you were making to card 2, towards card 1 - as well as any additional payments you're able to make.

You could potentially look to see if you'd be eligible for a 0% balance transfer offer, which could save you some interest.  Although, for relatively small sums such as yours, and if you'll be able to clear the larger debt in 5 months anyway, there may not be a huge amount to be gained.  Especially if there's a BT fee to pay.

Thank you for this info. Another question for everybody if youd dont mind. 

So with my current plan I will be credit card free in August. 

As well as doing this I an also saving money for a trip in October. Would you all advice me to keep to my original plan OR stop saving/reduce the amount I'm saving and clear my credit cards faster? 

Stop saving beyond your emergency fund and pay the credit card off faster, every month you have a balance that you could have cleared is a month that you are paying additional interest. Personally I would forget the trip in October and work towards saving for a while once the debts are cleared. 

grumbler

stacey9292 said:

CliveOfIndia said:

Well you're right, in terms of cold hard cash it makes sense to prioritise the one with the highest APR, no question.  However, there's not a huge difference between the first 2 cards in terms of APR.  And there is a psychological "feel-good" effect when you've cleared a debt completely.  So if you wanted to clear card number 2 completely, it would make only a small difference in terms of the overall money you're paying.  Hopefully, you would then divert the monthly payments that you were making to card 2, towards card 1 - as well as any additional payments you're able to make.

You could potentially look to see if you'd be eligible for a 0% balance transfer offer, which could save you some interest.  Although, for relatively small sums such as yours, and if you'll be able to clear the larger debt in 5 months anyway, there may not be a huge amount to be gained.  Especially if there's a BT fee to pay.

So with my current plan I will be credit card free in August. 

As well as doing this I an also saving money for a trip in October.

If this plan is really workable then much better plan would be to use all your money to pay the CCs off earlier and then start saving.

Dandytf

enthusiasticsaver said:

I would clear the smaller CC2 first as the interest rate is more or less the same as CC1. You may then be offered a 0% deal. 

Fastest cleared balance Can make sense, I'm re visiting Snowballing this year, and doing very well.