What should I do?

[Petsoflifenewyorkkkkk]

Hey! I’m just looking for some money advice please.

I have two credit cards.
1 has £3,250.00
and the other £1,350
currently I’m paying £150 for credit card number 1 and £50 for credit card number 2.

Ive decided Im going to add another £100 to pay it off quicker.
neither cards are 0% unfortunately and I’ve tried to get another, to combine both but no one will lend me that amount.

my question is, do I pay the extra £100 on the first credit card to bring the interest down or pay it on to the lower one?
or do I pay £200 on the lower one so that it pays off quicker and £100 on the higher one?

I really hope this all makes sense!

Which has the highest APR?

Can you do a balance transfer for any of the amount at all?

Do you have any savings to use at all?

Pay off the card that has the highest interest rate first.

Even if you can't move the whole balance, you will save money if you can transfer one of the cards to 0%. Or once you pay so much down transfer it over. Even if it feels a faff, it is so worth doing.

Do you know the interest rate you are being charged on each? Pay off the highest one first whilst making min payments on the other one.

If they are both the same rate of interest I would pay min payment on the big one and try and clear the smaller one ASAP and get it gone - I think k this is called the snowball method

keep an eye on Money Supermarket/Martin Lewis websites as new 0% credit cards become available quite frequently and you can test to see if you are eligible

thank you both for your responses, I really appreciate it.

@RandomMess it sounds silly but I don’t know which one has the highest interest rate. I can’t seem to find it on the app. They’re both with Virgin.
@DeedlessIndeed also couldn’t get a 0% that was longer than six months and the APR was awful.

I also have no savings.

The interest rate should be in small print on a statement

I’m hoping that they are both the same interest rate, so that I can do the snowball effect.

The rates should be on your statements or give them a quick call to say you are doing some admin and need to take a note of the rates for your records. If they are both the same rate then pay off the smaller card first. If one has a higher rate then definitely throw as much money as you can at that and just pay the minimum payment on the smaller one for the time being

If you can access the PDF statements via your app they should state the interest %

Thanks for this. Looks like the highest one is 21.6%. And the lowest is 22%.

@Chocaholic1216 so do you think I should pay off the lower amount first?

If you can face it try a phone call to Virgin & explain your situation they might be able to offer a consolidation or reduced interest for a period, you never know - good luck!

thank you.
I never thought to try this.

If interest rates are the same, I’d tackle smallest one first as psychologically better to get one cleared.
If not, pay off highest rate first.
Can you pick up overtime? I’d go through your budget and cut out any non essentials- subscriptions, gym, TV packages, eating out, clothes etc We did this last year (and worked overtime) and it was amazing how quickly we got rid of it.
I would also recommend having an emergency fund of 3-6 months of expenses (once you’re debt free), that should mean you never have to build up CC again

Thank you. I am picking up over time before the summer hols.
I definitely need some savings behind me. I am an impulsive spender but I know there are things I can cut out, including take aways.

Stepchange.org will advise you and help you organise your finance for free.
They are super helpful and non judgmental .

Yes if the rates are the same then definitely pay off the smaller one first as it does help mentally to feel like you have tackled one of them.
If one has a higher rate then definitely deal with that one first though as will cost you more in the long run

If you can get a 0% card for say £1000 , and not the full amount, then get it to bung at the other accounts to at least make inroads into the existing balance on the smaller balance. Then pay down the remainder.

Do you use Clearscore? It's helped me find the best deal for balance transfers in the past.

If you're not eligible for this, I would suggest trying to clear the smaller one first. Only 9 months to go, you can do it 😊

OP, did you make a typo with one of the interest rates? 22% is higher than 21.6%, so maybe an error crept in.

I think it means the card with the higher amount owing.

Oh, I see @Wilma55 - thanks!

If you can’t do a consolidation or 0% transfer for both, could you do it for one or at least a portion? Martin Lewis (as ever) has some good guides on this.

It might sound harsh but I really would aggressively look to cut spending for a focused few months, or how you can make some income (reselling? Odd jobs?) to make a dent in this.

At 20+% on your £4.6k outstanding you’re looking at close to a grand in interest per year without reducing the principal owed. Any savings would be better spend on paying down this debt - you’re paying 22% but would only get maybe 3% on them.

Your goal should be to figure out how much you can pay off quickly to reduce the amount owed and as a result the interest charges. Play around with this calculator (below) and see how your extra £100 per month repaid changes the time/ interest costs you will face.

https://www.moneysupermarket.com/credit-cards/calculator/

And good luck!

@AbzMoz is right really - you're paying a lot of money just to service the debt, so it would be a good idea to pay it off as quickly as you can.

I'm not sure whether you'll be accepted for 0% balance transfer deals.

Lots of luck OP - imagine how good you'll feel when the debt has gone.

Would you consider posting your incomings and outgoings either here or on the Money Saving Expert website? You'd probably get some helpful advice.