What card should I pay down first?

Dan_Marino

Hi,

I am after some advice on how best to allocate some money to my current credit cards. I have around £12,000 to pay down my balances and I'm trying to work out the best way to do that. Below are the details of my current cards (all on 0% balance transfer deals).

	NatWest	Virgin	Halifax
Balance	£9,055	£9,330	£9,800
Limit	£10,000	£12,500	£15,000
Last monthly payment	£92	£138	£308
Min Payment % of balance	1%	1%	2.50%
Original balance transfer	£9,200	£7,123	£3,500
Balance Transfer after promo	22.44%	22.48%	25.44%
Purchases	22.44%	22.48%	25.44%
Balance transfer end date	18/02/2026	11/11/2025	29/07/2025

My initial thought was to completely pay down the Halifax card, as that has the largest current monthly repayment and also has its balance transfer promo rate ending soonest.

I would then put the remaining £2k or so on to the Virgin card, as that has the next highest monthly amount and a promo rate end date sooner than NatWest.

I'd leave the NatWest card as it is for now, given that has longer to run on its deal and I can focus on paying that down more next year.

I'm interested if you think this is a good use of the £12,000 or should I put less on the Halifax card and more on the other 2?

Thanks for your help.

Mr_Blue52

It’s best to repay the card with the highest interest rate first. Once you have cleared that card, use the additional funds to pay off the next card with the highest interest rate. Keep doing that until all of your cards have been repaid.

It’s called the snowball effect as when you pay off the first debt you will have more money to pay off the next, and so on until all cards have been cleared.

surreysaver

You don't need to may more than the minimum whilst the debt is at 0%. Put the money in an easy access savings account paying a decent interest rate, and earn interest. Then pay off the card with the earliest expiring 0% promo rate first, when the expiry date starts approaching 

531063

This ^^^^^^^^^^^^^^^^^

molerat

Why are 2 of the cards carrying a higher balance than the BT ?  Are you paying any interest at all on those cards ?

If all at 0% I would be tempted to put that money somewhere earning a good interest rate, adding to that where possible,  and pay the minimums until nearer the time.  Why pay off 0% debt when you can earn money on it.

Dan_Marino

There has been additional spending on the Halifax card since the initial balance transfer a couple of years ago - hence the £300 monthly minimum on that currently. There are 10 months until the end of that promotional period, so any savings account would need to pay me £3,000 interest in the same period for it to be worthwhile?

ManyWays

Dan_Marino said:

There has been additional spending on the Halifax card since the initial balance transfer a couple of years ago - hence the £300 monthly minimum on that currently. There are 10 months until the end of that promotional period, so any savings account would need to pay me £3,000 interest in the same period for it to be worthwhile?

A lot less than that as that 300 a month will fall and a lot of it is clearing the balance not clearing interest being added, but I do think its sensible to clear the Halifax card first. After that, savings rates may have fallen so you may not gain much from the suggestion to only pay the minimums of the other cards and get some interest on your savings. Its your choice but your suggestion is simple and that is good.

MrGreen

I would put away a months worth of expenses as an emergency fund if you do not have it already then pay off the Halifax card and put any remainder on the Virgin. Putting your money in savings will not help you as you'll be paying much more interest on the cards due to the spending on them than the return you'd get from a savings account!

£7,330 / 12 months = £610

£9,055 / 16 months = £566

The above is a simple monthly average but it shows that you'll need to pay a minimum of £1,176 a month to clear the debt before the promotional offers end. DO NOT use these cards for spending as it will cost you much more over the long run. 

If you're thinking of doing another balance transfer when the promotional offers end then that will also cost more. Just think whatever you've spent the money on, that spending is costing more and more the longer the debt is around. I know as I've been there myself. Committing a set amount every month towards repayments EVERY month is what helped me.

Once you've paid off a card close the account

paul_c123

If the balance of a card isn't solely the BT (or another subsequent BT or MT offer at 0%), then there must be an element of that balance which is accruing interest payments, eg £9330-£7123= £2207 of the Virgin card and £9800-3500=£6300 of the Halifax card. (With the info given in the OP, I've done a calculation but your statement will detail the balance with the interest accurately).

It is important to pay these first for best efficiency. If you don't have enough to pay all of this, pay as much as you can to the highest interest one. The monthly min payments will all go to this anyway and it will be cleared in a few further months.

If you have excess cash after, then put into a savings account and put a calendar entry for the dates the various offers end, so you can pay the entire block of BT off (ideally) on this date.

DO NOT make purchases on a card carrying a BT. If needs be, store the card somewhere safe (like a drawer) not your wallet. I put a sticky label on mine, with "BT" on it.

maxximus75

surreysaver said:

You don't need to may more than the minimum whilst the debt is at 0%. Put the money in an easy access savings account paying a decent interest rate, and earn interest. Then pay off the card with the earliest expiring 0% promo rate first, when the expiry date starts approaching 

Make sure you pay at least £1 above the minimum payments.

Doing this will ensure you don’t get minimum payment markers on your credit reports which lenders don’t like to see.  It can help with future borrowing.

As for the pay down, as others have said, highest APR ending soonest first and so on.

CliveOfIndia

maxximus75 said:

surreysaver said:

You don't need to may more than the minimum whilst the debt is at 0%. Put the money in an easy access savings account paying a decent interest rate, and earn interest. Then pay off the card with the earliest expiring 0% promo rate first, when the expiry date starts approaching 

Make sure you pay at least £1 above the minimum payments.

Doing this will ensure you don’t get minimum payment markers on your credit reports which lenders don’t like to see.  It can help with future borrowing.

You're correct in saying that only paying the minimum can raise red flags to lenders - but this only applies to a standard interest-bearing card (the implication being that you're struggling to repay your debt).

If you've got a 0% promotional rate, this is flagged as such on your credit report and is visible to lenders.  So in that scenario, only paying the minimum is expected behaviour, and doesn't cause a problem.