Please explain the paying CC by standing order and how that helps... also Persistent Debt

[shamelesshackney]

In really clear terms. I'm £20k ish in debt across 3 different cards. I've been burying my head in the sand but I've recently really started to face up to things and have set myself a really firm budget each month and am being meticulous about where my money is going (using Monzo, I really recommend it.) And I now have extra money coming in and I can pay an additional £400 ish (on top of the minimum payments) each month but I don't really know where to start. Debts are as follows x 3 CC £9000, £8300 & £4500. No store cards or loans. I've looked at the spreadsheet but I don't really understand it. Any help would be great.

Also, I've had a few letters about the persistent debt from CCs and although I know this does affect me, could someone explain how this works.

Thank you Mumsnet!

What interest rates are your cards?

How is your credit score?

Do you still spend on the credit cards?

as follows:
£9k - 22.9%
£8.3k - 25.9%
£4.5k - 18.9%

I've stopped using 2 cards. And using one for a monthly payment.

Google snowball calculator - it will tell you the best way to pay them down

When you say ‘using one fur a monthly payment’, what do you mean?

Really you should stop using them all.

Do you know what your credit score is? I am assuming with a high level of debt & letters about ‘persistent debt’ from the CCs you won’t be eligible for the best 0% transfer deals but those interest rates are so high you need to get them down.

Have you been to moneysavingexpert? They have a tool where you can check your eligibility for credit card transfer deals before you apply. That would be really useful to you.

Eligibility calculator fir credit card deals:
www.moneysavingexpert.com/eligibility/credit-cards/

General tips and etc on improving your credit score:
[https://www.moneysavingexpert.com/creditclub]]

Debt free Wannabe board:
forums.moneysavingexpert.com/forumdisplay.php?f=76

Don’t use the CC for a monthly payment, use some of your spare £400 instead.

Can you stop using them All? Which are you adding to?

If you can stop using them, make a standing order to the 4.5 and 9k cards for last month's min payment plus £5. Then put every spare pound you have onto the 8.3k card.

If you are still spending on either the 4.5 or 9k card, I'd guess you need to pay min plus spending (say 7.99 for netflicks) plus 5 onto that card as the standing order.

How does the & £5 make any difference? Sorry, I'm so rubbish at this.

Its chipping away at the capital, so the interest is lower each month, so next month you pay off even more capital (5 plus interest saved). Its like a rollercoaster getting faster and faster each month.

You pay the most off the one with the highest interest rate and the others just pay minimum plus £5 as PP suggests.

But best of all you need to lower those interest rates because you’re paying MASSES in interest every month.

Thank you. I'm not sure how to lower the interest rates though. My Credit is okay but I don't think I'm a particularly attractive prospect and don't think I would qualify for a low rate card and not sure about a loan as I thought that wasn't advised to pay off debt.

Go and have a look at the eligibility calculator I posted. It will tell you if you are likely to be accepted for a card.

Loans are not advised because people don’t address the reason they fit into debt, and they keep spending on credit cards, and they end up in a worse state.

BUT. If you owe £20,000 and your interest rates are in the 20% range, you are losing so much money every month. In your case I would definitely look at a loan and be extremely strict about never ever getting into this state again...

Thanks - i'll check them out

Following

The CC Spreadsheet by @TaIkinPeace shows what happens if the payment is fixed at a certain amount, instead of being the minimum payment.
So lets say the £4,500 CC has a minimum payment currently of £135.
If you fixed it at say £140, instead of the payment lowering each time you paid some off, it remains the same so more goes towards the debt rather than just mostly paying interest. The spreadsheet will show you how much of a difference it makes to the timescale of repayment.

Check out mse doing a soft search on what lower rate credit cards you can get to transfer the highest rate %...
Phone your companies and ask what deals they have to reduce the interest
Start by snowballing the debt repayments while you sort out the rest..
Depending what cash you have available this could be cleared in a few years

Pay the minimum balance across all of them, and then pay off the one with the highest interest rate first.