Help - Not sure what the best option is?

WorkingHardDFW · 26 May 2008 at 11:08AM

Morning all - We've got a mountain of debt as you can see from my signature but we're making fantastic progress which is good....one step at a time!

Just got the target cc (one we're aiming to clear first) in and they are offering a BT at 7.92% LoB + 3% handling fee is used before 30/6/08. So I've plenty of time to make a decision. This is the card which will be cleared in full next month and has a limit of £5300.

We've also got a B/card which is now clear and has a limit of £5800 and for which i'm sure a BT will come through!!

Question is do I suffle things around?

We currently have four cc and one huge overdraft (plus 2 loans!) as outlined below:

Card/Interest/Limit/Balance
Barclacard/Not had a BT offer ---yet!/£5,800/£0
IF Low rate card/Int charges at 16.9%/£10,500/£9,142
RBS Platinum Card/Two rates£3.2k on 1.16% & 2.7K on 0.491%/£6,650/£5,588
Halifax Visa/Various rates avging 23%/£5,300/£1,828Lastest BT offer 7.92% LoB
Overdraft 15.24%/15.24%/£5,000/£5,000
MBNA Card/Int charged at 0.16% monthly/£6,900/£6,729

The overdraft we're not reducing on a monthly basis until the very last. I know its got a high interest rate but we felt our priority was reducing the cards.

My question is do we use the BT offer from the Halifax (when the card is clear next month) to:

move our debt around ie one CC to another?
move our OD to CC ?
leave well alone and carry on as we are?

Clearly if we move the OD debt to CC debt we'll be paying less interest pm but we'll also have less 'spare' money to throw at the target cc which will be the MNBA card once the Halifax card is clear. That doesn't necessarily mean our DF date will move back since we'll be tackling more debt at once? I'm not sure I'm making a whole lot of sense here. Perhaps I need to play around with my spreadsheet forecast a little to see how it all impacts?

I guess I'm a wee bit nervous since we've still got a mountain of debt to clear and I don't want to get it wrong.

Any thoughts appreciated as always :rolleyes:

Bismarck · 26 May 2008 at 11:15AM

hi,

first thing to think of is the Barclaycard life of balance offer of 6.9% which is fee-free.

secondly, bear in mind that the overdraft is technically repayable on demand and I'd be more wary of having that shut down on a bank's whim than the CC balances which should be OK as long as you make your payments....

When do your offer periods end...in particular the MBNA one...once that ends it will be monstrous!

WorkingHardDFW · 26 May 2008 at 11:22AM

Hi Bismarck

Thanks for your comments.

We've not had anything through from B/card so I will check out the LOB FF offer you've mentioned - thanks.

I agree with your comments on the OD being recalled at any moment! To be honest for most of last year (pre and post our LBM) I lived in fear of getting a phone call from the bank calling in:eek: . This was at a time when we didn't have any spare on the cards to shuffle it about. I think thats what was at the back of my mind now we've got two cards more or less clear and a little leeway to move things around.

I can't remember when the MBNA offer ends (I will check it out) but I'm concious about it which is why its will become the target to clear down asap.

Bismarck · 26 May 2008 at 11:33AM

For Barclaycard, you can just check the offer online as a current customer and you can do it straightaway or over the phone as you prefer.

Do you check your accounts online? I do for MBNA and B/card and it's very useful if there are delays in getting statements...especially with so little leeway in making late payments nowadays.

Re OD, if you can have a position that you can clear the MBNA card (by transferring it somewhere) and use that to super balance transfer to clear your OD, that's some kind of fall back if the worst happens and the bank calls the OD in...

WorkingHardDFW · 26 May 2008 at 11:37AM

Sounds advice Bismark.

I've just checked with B/Card and you are correct in saying that existing customers can BT at 6.9% LOB Fee free.

I do check all my accounts online I like to know exactly what is owed/due etc. I didn't do this pre my LBM last year!

Your comments have lead to me think that maybe I could:

BT the OD to Halifax
BT to as much as I can of the MBNA card to Barclaycard

Perhaps that is a little too much BTing!

Bismarck · 26 May 2008 at 11:59AM

Depends when your MBNA deal ends...I assume you paid for the transfer at approx 3% and it's got low repayments...you should get the full value from that as well, as long as it fits in with everything else.

I'd look at transferring the Halifax to Barclaycard to free up the 7.92 LOB straight away...also give yourself chance to clear the card plus any residual interest...then work out what else can go to Bcard, depending on the offers you can get on the clear card but I don't see whay you can't get everything to under 10% interest in a few months time....

Incidentally, how dis you plan to BT the OD to Halifax?

CannyJock · 26 May 2008 at 5:02PM

Card / APR / BT fee / Limit / Balance
Halifax Visa / 23% APR / n.a. / £5,300 / £1,828
IF Low rate card / 16.9% APR / n.a. / £10,500 / £9,142 /
Overdraft / 15.24% APR / n.a. / £5,000 / £5,000
RBS Platinum Card / 14.84% APR / 3% /part of £ 6,650 / £3,200
Halifax VISA (LOB) / 7.92% APR / 3% / 5300 / 0
Barclaycard (LOB) / 6.9% APR / 0% / £5,800 / £ 0
RBS Platinum Card / 6.05% APR / 3% / part of £ 6,650 / £2,700
MBNA Card / 1.94% APR / 3% / £6,900 / £6,729

If I've read it properly, these are the APR rates for the debts? Then I've just juggled them into order to see the priority ones first and coloured up the lines that relate to each other.

As Bismark points out, the end of any introductory period on the MBNA card or any other cards could make a big difference.

The RBS Platinum card, with it's split interest - allocation of payments will work to reduce the lowest APR debt first, leaving you paying interest on the £ 3200 at 14.84%. If there is the possibility to clear this to make around £ 6,650 of credit available all at 6.05% then it may be worth clearing it just to reload it with the 16.9% IF card balance.

From this, I'd say it looks like:

Immediate balance transfer from Halifax to Barclaycard to cover balance plus residual interest, possibly creating a small credit balance (approx £ 1870). When you make this call to Barclaycard with your Halifax card details, well worth asking them for an increase in your credit limit, might be a search on your credit report but worth it.
You need to wait to get a nil (or credit) balance statement from Halifax before doing any LOB transfer onto it.
I'd say the IF (not so low rate) card at 16.9% would be the next candidate, transfer as much as you can from this to your Barclaycard (hopefully with an increased limit)
Once you get a nil balance in from Halifax transfer the remainder of the IF card onto it. Again, on the call to Halifax ask them for an increase in your credit limit to allow as large a LOB transfer as possible (ask them to waive the fee and see if they will play ball, ask to speak to a supervisor to have it authorised if necessary).

General rule with these things is to make the minimum repayments on the lowest APR debt and put every penny to the highest APR debt as possible. There's a snowballing calculator at www.whatsthecost.com that'll do the calcs and let you see how much interest you'll save doing this.

If IF will then offer a low rate LOB deal (and no harm in asking) then it would be RBS card to clear that with the amount at 14.84% still on it.

When was the last time that you applied for a card? Any idea of your chances of getting a new 0% card to help shift the debt down onto a 0% rate for a period of time?

WorkingHardDFW · 27 May 2008 at 7:46AM

Wow CannyJock thanks for the input !

You've turned the whole issue of our credit card shuffle on its head! Amazing what a fresh pair of eyes can do - much appreciated.

In response to some points raised.

We've used whatsthecost.com quite sucessfully although I did find it difficult with not only numerous and large cc's but with the variable rates on quite a few of the cards. I've set up my own spreadsheet now which takes the card balances forward on a monthly basis although its calculation of interest is not very scientific it helps us focus on getting debt free.
The IF card (having just checked) is at different rates as well. Some is at 0.013% per day and the rest is at 16.94% (£5700) and its clearly its the lower rate which gets paid off first.
We've not applied for a Credit Card since this time last year when we got turned down for one. This was when our LBM came on fully! We've got a great credit history and not missed payments or been late with anything it was understandibly the size of our debt which got us declined! I'm almost glad we were declined since its helped us get to where we are today £10k less in debt!:o . Therefore I am reluctant to apply now - scared would be a good discription:D .

I guess I am still confused as to the best option since at present I don't think we've got the option to apply for a 0% card (I could be wrong though) and I think we just need to use the space we've created on two cards (Halifax will be clear next month) to try and reduce interest as much as possible. With having at least two cards with different interest rates it does make it slighltly more complex............why is nothing simple

Help - Not sure what the best option is?

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