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  • FIRST POST
    • Alwaysskint2016
    • By Alwaysskint2016 11th Aug 18, 3:43 PM
    • 25Posts
    • 75Thanks
    Alwaysskint2016
    Which to prioritise?
    • #1
    • 11th Aug 18, 3:43 PM
    Which to prioritise? 11th Aug 18 at 3:43 PM
    Sorry if this has been asked before. I know when snowballing to clear debt the idea is to pay off every spare penny to the highest interest debt first then move onto the next and so forth.

    My credit cards are on 0% APR until 2020/2021 and I have 2 loans with APR 15.9% and 9.2%. I would have though to pay everything to the 15.9% debt first however my credit cards will not be paid off before the rate deal ends. So is it best to clear the credit card debt first to avoid the APR going up to say 19.9% normal APR thus paying the interest on the loans? or pay off the loans first as they are the highest APR at the moment then worry about the credit card debt nearer the time, maybe switch to another 0% at that time?

    I'll list the debts so you see:
    Loan 1 - £145.17 per month - Ends 31/07/21 (15.9%)
    Loan 2 - £223.63 per month - Ends 28/07/20 (9.2%)

    CC1 - Balance £6497.84 - £65.00 per month - 0% Ends Feb 2020
    CC2 - Balance £1503.39 - £40.00 per month - 0% Ends Sept 2020
    CC3 - Balance £2805.03 - £40.00 per month - 0% Ends March 2020
    CC4 - Balance £1698.00 - £50.00 per month - 0% Ends Jan 2021
    CC5 - Balance £4878.00 - £50.00 per month - 0% Ends Jan 2020

    I'm more concerned about CC1 and CC5 as their balances are much higher than the others and will never be paid off before the rate ends.

    What should I do? Thanks.
    Debt busting start date 08/08/18 - total debt £33,182.34 Debt now £33,092.85 - Paid 0.27%

Page 1
    • zx81
    • By zx81 11th Aug 18, 3:49 PM
    • 18,072 Posts
    • 19,289 Thanks
    zx81
    • #2
    • 11th Aug 18, 3:49 PM
    • #2
    • 11th Aug 18, 3:49 PM
    Loan 1 is the priority. You'll need to look at the go to rates of the cards to see whether there are any that you should focus on.

    The secret is in the rates, not the amounts.
    • DD265
    • By DD265 11th Aug 18, 6:27 PM
    • 1,416 Posts
    • 3,248 Thanks
    DD265
    • #3
    • 11th Aug 18, 6:27 PM
    • #3
    • 11th Aug 18, 6:27 PM
    I would definitely focus on loan 1, however, what are the limits on CC2 and CC4? If you could clear those balances would you be able to do balance transfers from some of the other cards as those 0% deals end?
    • Willing2Learn
    • By Willing2Learn 11th Aug 18, 7:03 PM
    • 828 Posts
    • 639 Thanks
    Willing2Learn
    • #4
    • 11th Aug 18, 7:03 PM
    • #4
    • 11th Aug 18, 7:03 PM
    Another vote for loan #1. It has the highest interest rate. If possible, try to overpay loan #1 so that the debt is cleared early.

    How close to the credit limits are the cards? If they have some breathing space then you are likely to be offered a new balance transfer promotion at some point.

    As zx81 said, you need to find out what their non-promotion interest rates are for the credit cards, in order to determine their priority.
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    • Fosterdog
    • By Fosterdog 11th Aug 18, 7:34 PM
    • 3,929 Posts
    • 6,761 Thanks
    Fosterdog
    • #5
    • 11th Aug 18, 7:34 PM
    • #5
    • 11th Aug 18, 7:34 PM
    How much are each of the loans for and how much extra do you have to throw at the debts?
    • pennystretcher
    • By pennystretcher 12th Aug 18, 8:34 AM
    • 393 Posts
    • 1,453 Thanks
    pennystretcher
    • #6
    • 12th Aug 18, 8:34 AM
    • #6
    • 12th Aug 18, 8:34 AM
    I would pay minimum on CC4 and use the difference to pay off the loans first - not sure if there are any restrictions on your loan OPs. (Loan 1 first, then #2)

    SOA would be useful..
    • datlex
    • By datlex 12th Aug 18, 10:46 AM
    • 1,724 Posts
    • 1,619 Thanks
    datlex
    • #7
    • 12th Aug 18, 10:46 AM
    • #7
    • 12th Aug 18, 10:46 AM
    If the loans are on fixed terms then you may not be able to over pay them. You would need to speak to the loan companies.

    The loans won't suddenly jump up to a higher rate. So do not pay them off first.

    Pay off your credit cards, I would look at CC3 as the priority- it has the shortest remaining 0% time left.
    • Alwaysskint2016
    • By Alwaysskint2016 12th Aug 18, 3:13 PM
    • 25 Posts
    • 75 Thanks
    Alwaysskint2016
    • #8
    • 12th Aug 18, 3:13 PM
    • #8
    • 12th Aug 18, 3:13 PM
    Thanks everyone who's taken the time to reply to my post.

    Both loans have a balance of just over £5k each and I have checked and I will be OK to repay/make additional payments. Plus any repayments will be used to reduce the last payment/end term (rather than reduce the remaining DD's, like Zopa did previously).

    So I'll be making payments to Loan 1, then Loan 2 then focus on the earliest credit cards. Hopefully by then the balances will be a lot less and can shift any remaining balance around to new 0% until cleared.

    Thanks again
    Debt busting start date 08/08/18 - total debt £33,182.34 Debt now £33,092.85 - Paid 0.27%

    • datlex
    • By datlex 12th Aug 18, 11:31 PM
    • 1,724 Posts
    • 1,619 Thanks
    datlex
    • #9
    • 12th Aug 18, 11:31 PM
    • #9
    • 12th Aug 18, 11:31 PM
    I would seriously think twice about paying of the loans, unless you know you can get the 0% paid off or get a fresh 0% rate. You don't want to suddenly be faced with a higher debt when the interest rate applies. The loans won't increase in cost. The credit cards are likely to.
    • indesisiv
    • By indesisiv 13th Aug 18, 2:47 PM
    • 6,102 Posts
    • 20,085 Thanks
    indesisiv
    I would seriously think twice about paying of the loans, unless you know you can get the 0% paid off or get a fresh 0% rate. You don't want to suddenly be faced with a higher debt when the interest rate applies. The loans won't increase in cost. The credit cards are likely to.
    Originally posted by datlex
    I'd agree with this. I'd be personally looking to clear at least 1 credit card to give yourself some flexibility for balance transfers just in case you haven't cleared the other cards before the interest rates increase.
    “Time is intended to be spent, not saved” - Alfred Wainwright
    • Alwaysskint2016
    • By Alwaysskint2016 13th Aug 18, 3:13 PM
    • 25 Posts
    • 75 Thanks
    Alwaysskint2016
    I would seriously think twice about paying of the loans, unless you know you can get the 0% paid off or get a fresh 0% rate. You don't want to suddenly be faced with a higher debt when the interest rate applies. The loans won't increase in cost. The credit cards are likely to.
    Originally posted by datlex
    This was my concern, if I did overpay the loans I will still have a large amount of debt when the 0% deals ends and the rate increases. There's no guarantee I could get another 0% balance transfer rate at that time, so you're right after looking at what the balances would be if minimum payments were made until the deals end I'm going to overpay on the earliest largest balance CC #5, then CC #1, hopefully by then there will be just a few thousand left to then balance transfer to 0% (if possible) until cleared. As you say the loans interest has already been applied so these can just run their course.

    Thanks again everyone for posting.
    Debt busting start date 08/08/18 - total debt £33,182.34 Debt now £33,092.85 - Paid 0.27%

    • Chandelier.
    • By Chandelier. 13th Aug 18, 3:51 PM
    • 718 Posts
    • 1,839 Thanks
    Chandelier.
    How much money do you have available to throw at your debt each month?

    I know you have stated that you are going to focus on overpaying CC5 & then CC1 but I was just wondering whether it would be worth focusing on one of the lower balances such as CC2 as well as one of the higher ones? The idea being that by clearing one of the lower balances it may possibly offer 0% balance transfers once others end that you could then transfer any remaining debt to at the end of their terms? You may even get increased limits through doing this which may enable you to transfer some of the larger balances to.

    Another option regarding the loans is you could maybe round up the figures to the nearest pound or zero, for example,

    Loan 1 - £145.17 per month - round this up to £150 per month.
    Loan 2 - £223.63 per month- round this up to £230 per month.

    I know when I previously had a loan for my car, I liked to see the balances round to the nearest zero or five, i.e. £3500 or £3550.

    You could also just the PAD (payment a day) challenge when dealing with your debts. You could use the idea of any spare pennies in my bank account i.e. £5.53, You could round it down to the nearest zero meaning it would be down to £5 and that 53p is utitlised elsewhere, maybe towards your debt.

    At the end of the day is totally up to you how you choose to tackle this debt head on. These are just a few other ideas I thought about when reading your thread. It is good you are wanting to pay it all off and I wish you well on your journey.
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