Help deciding how to pay off credit cards

grumbler

Dandytf said:

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.

I don't know what you are visiting, but snowballing isn't "Fastest cleared balance" first.

In fact it's "if you've got more than one debt, ... line them all up in order of the highest interest rate, from high to low and then shift all your spare cash towards paying the highest interest rate debt"

https://www.moneysavingexpert.com/news/2022/02/if-you-can-t-afford-to-clear-your-credit-card-in-full-and-you-re/

eskbanker

grumbler said:

Dandytf said:

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.

I don't know what you are visiting, but snowballing isn't "Fastest cleared balance" first.

In fact it's "if you've got more than one debt, ... line them all up in order of the highest interest rate, from high to low and then shift all your spare cash towards paying the highest interest rate debt"

https://www.moneysavingexpert.com/news/2022/02/if-you-can-t-afford-to-clear-your-credit-card-in-full-and-you-re/

To be fair, there doesn't seem to be unanimity about definition, and there are plenty of sites describing prioritising highest rate as the 'avalanche method', with prioritising smallest balance labelled as the 'snowball method':

https://www.investopedia.com/articles/personal-finance/080716/debt-avalanche-vs-debt-snowball-which-best-you.asp
https://www.ramseysolutions.com/debt/how-the-debt-snowball-method-works
https://debtcamel.co.uk/debt-options/guide-to-snowballing/
https://www.creditkarma.com/advice/i/what-is-the-snowball-method

Having said that, there is a lot to be said for a strategy of adopting the exactly opposite approach of that chosen by a certain serial debtor on here....

Dandytf

grumbler said:

Dandytf said:

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.

I don't know what you are visiting, but snowballing isn't "Fastest cleared balance" first.

In fact it's "if you've got more than one debt, ... line them all up in order of the highest interest rate, from high to low and then shift all your spare cash towards paying the highest interest rate debt"

https://www.moneysavingexpert.com/news/2022/02/if-you-can-t-afford-to-clear-your-credit-card-in-full-and-you-re/

Whilst I understand most Cost effective way of Snowballing is via Highest apr 1st.
It has been mentioned before, myself included that some take inspiration from Clearing Lowest Balance 1st.
This provides fastest Zero Balance, before next Balance etc.

Dobbibill

OP - although there is not a great deal of different between your APR for card 1 &2. If you were to go highest APR first, you would be approx. half way through your total credit card debt by the time you clear card 1 which I would think would be a real boost to keep going and not lose motivation.  
Whatever you decide, I wish you all the best. 

MrFrugalFever

CC1 is both highest balance and highest APR, therefore costing you the most. Divert all available funds (including savings but not emergency funds) to this whilst making the minimum payments + £5 on both CC2 & CC3. 

You may find that your trip in October will either have to be adjusted or postponed but ultimately you will be debt free and surely that is the end game here?

grumbler

MrFrugalFever said:

...but not emergency funds.

emergency funds have been mentioned more than once here.

With three credit cards the OP needs only emergency CASH for something than can't be paid with a CC. 

All other money has to be diverted to CCs that, if needed, can be used for emergencies.

SuperAllyB

Dandytf said:

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.

Considering how often you've started that you've not borrowed outside your means since you last cleared all your debt, why would you need to revisit snowballing?

grumbler

eskbanker said:

grumbler said:

Dandytf said:

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.

I don't know what you are visiting, but snowballing isn't "Fastest cleared balance" first.

In fact it's "if you've got more than one debt, ... line them all up in order of the highest interest rate, from high to low and then shift all your spare cash towards paying the highest interest rate debt"

https://www.moneysavingexpert.com/news/2022/02/if-you-can-t-afford-to-clear-your-credit-card-in-full-and-you-re/

 ... prioritising smallest balance labelled as the 'snowball method':

I didn't read the articles, but it's beyond me why this 'method' even exists and is recommended by serious advisers.

Debt is a serious issue and has to be dealt with rationally, not emotionally.

eskbanker

grumbler said:

eskbanker said:

grumbler said:

Dandytf said:

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.

I don't know what you are visiting, but snowballing isn't "Fastest cleared balance" first.

In fact it's "if you've got more than one debt, ... line them all up in order of the highest interest rate, from high to low and then shift all your spare cash towards paying the highest interest rate debt"

https://www.moneysavingexpert.com/news/2022/02/if-you-can-t-afford-to-clear-your-credit-card-in-full-and-you-re/

 ... prioritising smallest balance labelled as the 'snowball method':

I didn't read the articles, but it's beyond me why this 'method' even exists and is recommended by serious advisers.

Debt is a serious issue and has to be dealt with rationally, not emotionally.

Not sure it's actually recommended as such, but, while I entirely agree that financially it's undoubtedly an inferior method to highest rate first, there are psychological factors at play for some too, so some feel that clearing off one or more debts completely is 'better' than making partial progress on others.  It's broadly the same principle as many preferring to pay off a mortgage even when it's possible to invest (or even save) for a higher return than the interest cost on the mortgage....

Brie

Frankly I'm always in favour of using all the savings you have to clear all the cards as quickly as possible.  Paying in excess of 40% interest is an emergency and that's what the savings are there for.  Just that card 1 is costing you more than £40 a month.  Just think how fast you can rebuild your savings once all of these are out of the way!