Personal Loan to attack credit card debt

rocktron_amp

Hello

I am looking for advice that people have gone with a personal loan to pay credit card debt.

I have taken a personal loan that I will use to consolidate 6 credit cards.
I have 4 credit cards on high balances, 3 of them are high interest rate.

The loan can clear nearly 3 the credit cards completely. However, I am looking for the best strategy formula, avalanche first and then snowball.

Are there low cost or free independent advisor or experienced people who can help to make the best of this personal loan? I want to get out of the credit card debt once and for all.

Unfortunately, I will have to snowball. How much goes in to what? I think I know.

BTW: the personal loan has a much lower rate than the lowest credit card APR. I have a ready Google Spreadsheet that I can spin up to show the down payments. With my current strategy I will clear all credit cards completely February 2029, and the loan will finish May 2025. 60 months. It is currently avalanche and then snowball.

This sh££e is not easy. Hope you all get out the bliming debt. No to credit cards. I learnt my lessons, I tell you.

ManyWays

What are your card debts, lender, balance, and interest rate? 
Avalanche is much more efficient than Snowball. 

The loan will finish May 2025 do you mean May 2030?
What is the interest rate on this loan?

born_again

What ever you do, as you clear the card. Get them closed. 👍

fatbelly

Could you not get any 0% offers on a credit card?

If you want to use a snowball calculator, there's one here

https://www.lemonfool.co.uk/financecalculators/snowball-calculator.php

CliveOfIndia

Purely in terms of cold hard cash, you need to prioritise the debt with the highest APR, then tackle the next-highest, and so on.  Yes, there is a psychological boost from clearing one of the debts completely, even if it's a lower APR - but prioritising the highest-rate debts will save you the most money overall.

The only caveat to this would be if some of your debt is on a low promotional rate - in that situation you would need to factor in when the promotional rate expires, and what standard rate it will revert to.

But whatever approach you take, once you've cleared one debt you need to put the money you were paying towards that one toward the other debts.

rocktron_amp

ManyWays said:

What are your card debts, lender, balance, and interest rate? 
Avalanche is much more efficient than Snowball. 

The loan will finish May 2025 do you mean May 2030?
What is the interest rate on this loan?

Loan will finish May 2030 for 60 month. That is what I should have written. Dur brain!

100% agree Avalanche is much more efficient than Snowball.

That is the strategy of the Personal Loan (M)

Question is: what is the best division of Loan (M)?

I found a Google Spreadsheet calculation with the compound APR formula.

Some great advice out there on the Interweb.

I built my own Snowball Google Spreadsheet with all the descending payments.

The tutorial was based on the Excel down payments.

I get exactly what you ManyWays are talking about.

Actually a co-worker recently said to me, yesterday,  why don't you put them a speculatively question in AI chatbot. E.g. "I have a friend of friend with these credit card balances and APR: A,B,C,D,E,F,G.  I have a personal loan of £M. What is the best division of loan M to down pay efficiently?" Try it both with ChatGPT, DeepSeek.  Obviously pause and think about feeding the monster machine of AI LLM. Personal Identifable Information. Avoid. But it could help me decide the best allocation of M to D,E,F,G,H or what3ver?

I found these Excel templates and I worked it out for one Credit Card. Simple.

Then built the next Credit Card. I built my own Snowballer in Google Spreadsheet over Excel, but the principle is the same. I organised the Credits Cards in the order from left to right from ascending balance and then secondary ascending in APR. I organise the rows by increasing monthly dates e.g 01/04/2025 and then 01/05/2025 etc for 60 to 72 months into the future,.

Let's say I want to write a Snowball for 3 credit cards A, B and C.

Say the balances are A = £6000, B = £12000 and C = £18,000. Ignore the APR for now, take the simplest case.

Built the spreadsheet careful, start with the credit card A. Lowest balance. Let's say you have an extra payment income Z (£150) each month for budget.

The payment down for lowest balance credit card A with the minimum payment and extra budget Z until to paid.

(Keep the minimum payments meanwhile for B and C)

Once A balance beomes £0 or negative that A payment plus Z goes on the next month, to shoot down credit card B

(Keep the minimum payments meanwhile for C)

Once B balance becomes £0 or negative that B payment plus Z goes on the next month, to shoot credit card C

(All your money going to C)

Once C is negative or zero £)

Credit Cards are dead. Debt free. \o/

The trick I did was to modify my spreadsheet, I duplicated it and added speculative avalanches to each credit card A, B, C, D, E, F ( I have 6 credits cards). This is applied in rows above the regular snowballing rows.

I then added a PMT on the far right side that show the Personal Loan paydown.

It's all very cool to see the paydown and budget into the future. At least I can see when the flaming end date is.

The rule I will follow. No more credit card spending. Everything is coming off Debit card. If I don't have it, I ain't spending it on credit cards.

Good luck everyone

Finally somebody asked about 0% balance transfers. Yes it works if you have a great credit score rating.

I actually had the 40 months Sainsbury balance transfer (2018). Unfortunately, it is just marketing.

I just could not clear my big debt. My credit score is now "fair".

In recent years, my credit score means that I can only get Virgin balance transfer 0% at 12 months. I did that. It is just not enough months to clear the biggest APR card. Although it will help with the small amount on the credit card highest APR. This is the definition of the DEBT TRAP.

Ergo It is not easy to clear using the Ping - Pong 0% BT strategy. Look Banks want to their WAD, that's it really. They point you to StepChange or CA.

So I went with personal loan as my strategy. Lower interest rate versus Higher Credit Card APR wins.

Perhaps by clearing the cards, the banks may offer me again 24/30 month balance transfer 0%. I'd love to have them but I do not see Banks offering me longer terms until I clear down the debt somewhat, in other words improve my credit rating. But remember this 0% BT is all marketing. It is how they got me. They want your soul suckers too!

Never Again and I mean Never Again.

Refs

[1] https://www.excel-easy.com/examples/loan-amortization-schedule.html

[2] https://www.datacamp.com/tutorial/amortization-schedule-excel

[3] https://golayer.io/blog/google-sheets/google-sheets-amortization-schedule/