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Best order to pay off debts
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FatCat14
Posts: 1 Newbie
Hi there,
I have 4 different debts clear, approximately 1 x £2200, 2 x £1700, and 1 x £1200. All have similar interest rates.
Until recently I was only in the position to pay minimum amounts, so the debt has hardly decreased at all. However I can now afford to pay £250-£300 a month towards the debts on top of the minimum payment.
My question is, what’s the best plan of action? Is it best to focus all of this extra money on one ie the largest one until it is cleared? Or a smaller one? Or is it better to spread this extra money across all the debts?
I’m doing this because I want to improve my credit file (my total utilisation is currently very high) and I’m now in a better position to tackle that a bit. I am trying to plan for the future in terms of getting a mortgage with my partner, but that won’t be for at least three years. If I continue to steadily pay off my debts, will I be in better stead for getting a mortgage in a few years even with a history of high credit utilisation?
Thanks for any advice
I have 4 different debts clear, approximately 1 x £2200, 2 x £1700, and 1 x £1200. All have similar interest rates.
Until recently I was only in the position to pay minimum amounts, so the debt has hardly decreased at all. However I can now afford to pay £250-£300 a month towards the debts on top of the minimum payment.
My question is, what’s the best plan of action? Is it best to focus all of this extra money on one ie the largest one until it is cleared? Or a smaller one? Or is it better to spread this extra money across all the debts?
I’m doing this because I want to improve my credit file (my total utilisation is currently very high) and I’m now in a better position to tackle that a bit. I am trying to plan for the future in terms of getting a mortgage with my partner, but that won’t be for at least three years. If I continue to steadily pay off my debts, will I be in better stead for getting a mortgage in a few years even with a history of high credit utilisation?
Thanks for any advice
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Comments
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highest interest rate even is its 0.0001% greater.Censorship Reigns Supreme in Troll City...0
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You need to give more info. What they are, companies involved, credit limits and interest rates.
As an example, some credit cards are good at giving 0% offers. If you have one of these, then I'd pay it first. Then as it reduces you can transfer a balance from somewhere else to reduce your interest.0 -
Whilst the highest rate is, mathematically, the one to aim at first, getting rid of the smallest balance can have a psychological effect, and make you feel as if you're getting somewhere with it. It also be one less outgoing per month, which can then be thrown at the other debt.
And, as mentioned above, if one has the potential of a 0% balance transfer offer, it pays to get that one cleared and shift as much of the remaining debt to that as you can.0
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