Who do I pay off first?

CravingSaving

I know the rule with credit cards is to pay off the one with the highest interest rate first, and minimum payment on others in the meantime, but does this always apply?

I have £1,240 to pay off @ 19.9% which is my highest interest rate (but not my highest debt-per-card) but only £200 left on one card @ 15.76%

Should I try to pay off the £200 debt first to get it out of the way or stick at paying off the 19.9% debt for higher amount?

Trying to be clever just makes my brain hurt!:rolleyes:

Bokkens

You will be paying just over £2.63 a month interest on the £200 and £20.56 a month on the £1240 per month (both figures are approximate as the sums reduce each month).
So if you left the larger one and paid the smaller loan in say four months you would have a interest charges of about £80 added to the larger loan ,if you paid the large loan first and this took say ten months you would have about £31 added in interest.
Concentrate on the big loan first and then demolish the smaller one.

CannyJock

Look at the snowball calculator at www.whatsthecost.com

It'll do the calcs for you if you want to see the detail - otherwise do what Bokkens says and always pay minimum on lowest APR and maximum from highest APR to pay the minimum interest.

CravingSaving

Thanks for your replies! It does make sense when you look at the bigger picture, its just tempting to get rid of the little debt first!

Back to plan A then!:D

Idiophreak

CravingSaving wrote: »

I know the rule with credit cards is to pay off the one with the highest interest rate first, and minimum payment on others in the meantime, but does this always apply?

Pretty much

Getting rid of the little one *is* tempting, but you have to think of that as your "better" debt and try and hold onto it for as long as possible (ie paying as little as possible off)...try to think of it as "once I plough through all this "worse" debt, I'll just have a little bit of "better" debt left to pay..."

(and I take it you've already tried to get a 0% card to BT these balances to? and called the cards in question to ask for reduced rates?)

CravingSaving

I have just been to whatsthecost.com - thank you so much CannyJock! Its brilliant. I input all my credit card debts and it makes so much sense when you see it all laid out like that. I feel much happier now about my ability to be able to pay it all off (eventually).

Idiophreak - ummm yes and no to your questions! I have exhausted my ability to get 0% transfers at the moment - I have been doing that for the last few years and they have all just run out and I dont think I can re-jiggle any more! I dont want to apply for a new card to get a 0% on as I dont trust myself to not spend on it and I cant afford to take the risk.

As for asking for a better rate from my current credit cards.... Can I REALLY do that? I havent had the nerve to try it tbh. I know I should follow the rule that "if you dont ask, you will never know" but I feel so cheeky!
Its just taken all my nerve to call the council to ask if my council tax is correctly banded and to get them to do a revised assessment (fingers crossed on that one...!) I came off the phone a quivering wreck, though kindof hopefully happy too!

JimmyTheWig

Concentrating on the higher interest card is the logical thing to do.
But psycologically you might be able to push yourself harder to pay off the smaller balance quicker than you could pay off £200 of the larger amount.

JimmyTheWig

But hold on a minute...
What are the chances of transfering debt from the 19.9% card to the 15.76% card? Obviously depends on credit limits, but at least it would mean cheaper debt without applying for new cards.
Also will depend on how long it will take you to pay off the debt. If you can do so quickly then the transfer fee might wipe out any savings you would make in interest.

CravingSaving

Yeah, I see where you are going JimmyTheWig, but now my brain just hurts again!:rotfl:

Idiophreak

CravingSaving wrote: »

I have exhausted my ability to get 0% transfers at the moment - I have been doing that for the last few years and they have all just run out and I dont think I can re-jiggle any more! I dont want to apply for a new card to get a 0% on as I dont trust myself to not spend on it and I cant afford to take the risk.

Might be worth waiting 6 months - your credit rating will recover a bit and you'll stand more chance getting a good 0% card...and just tell yourself that any spending will lose the 0% - that's what I do...Plus, the second the card comes through the door it's cut up and in the bin, so very little chance of me spending on it.

As to ringing and asking - you can only ask.

You can either just ring and be honest. Say that you're not very happy with the rate and would like them to drop it a bit. Failing that, call up and threaten to cancel the card - say you're going to get a different one with a better rate. Amazing the discounts the threat of losing your business can get you. Might be worth a shot, anyway.

CravingSaving

Well, isnt it amazing what you can do when you feel motivated! Its actually been over 6 months since I last applied for a credit card and was given a pathetic £250 limit on one, and refused by another.... so I thought I would just see what happens.... I have just applied for the Tesco Bonus Credit Card with 0% for 13 months on BTs and.....WOOHOO I got it! With a £3,500 limit!

I initially asked for just £500 from my worst debt as I thought I would only get a low limit if I was accepted at all. I think I will stick with that, as I know I can pay that off in the 13 months. Just going to check out the snowball calculator to see how much difference that makes.

Chuffed? Me? You bet!:T

Now, while I am in the mood, going to "saynoto0870" and get phone numbers to call other credit cards and see if I can get them to reduce their %s!