Should I clear all CC with loan???

Dumplin · 5 February 2005 at 8:18PM

Hi all,

I now owe just over £26k on cc abd £14k ona personal loan.

I have swithched cards all over the place and they now stand as follows.

barclaycard £15591 5% life
mint £4150 6.9% life
abbey £7200 0% till may (although plan to move this to egg & tsb 0% for 9 & 12months) don't know after that I have assumed I can get something around 7.9 fixed.

I am currently paying £595 a month (cc only) and at this rate will have the majority of debts paid off in 50 months time. but this leaves me with minimal money after bills for me around £40 a month.

If I get a loan as well as the A&L one (could get in hubby's name) for £25k over 6 years this will cost me only £411 a month have £200ish a month left over. if I saved half of this in 50 months time I would have saved £13k enough to clear the loan. loan advertised at 5.9%.

I don't know if beacuse I dont know what'll happen at the end of the 0% it's throwing my calcs out.

What so you think is it worth putting all my eggs in one basket to save a few pounds??

Any suggestions welcome
Many thanks
Dumplin

Malestrom · 6 February 2005 at 9:13PM

Your calculations are out i'm afraid. By taking the second loan, you free up £184pm, half of which you want to save for 50 months (why 50, the loan would be for 60??), which makes £4600 not 13k!!! Also, you only improve your available income by £52pm.

I believe you could probably make that improvement by budgeting alone? What about moving that Mint card balance to a different 0% offer?

At the end of the day, the 2nd loan isn't a bad idea, so long as you get rid off all those credit cards when the balances are cleared!

Dumplin · 6 February 2005 at 11:19PM

Sorry, forgot to mention that my A&L loan only has 40 months left so I would put that additional £354 towards clearing the new loan. I also have allowed for a £600 per yr pay rise. ( I have never got less than 3% in the last 5 yrs)

I would move the mint balance but I am very worried that I will not be able to get a 0% or fixed for life balance at the end and end. That would leave me with a total of £11k ( including the abbey card at a possible 14% although I haven't worked out how much it will actually cost me.

Cutting up all those cards now that's the question I will admit I am a terrable impulse buyer so so that I now don't carry my credit cards with me. I only take out 1 to do my shopping on and clear it in full by DD at the end of the month.

If I do clear everything with a second loan, between me & hubby I would have access to credit on cards to the sum of £70k, we only earn £50 between us!!! How on earth can the companies justify giving us that much rope to hang ourselves with!!

Malestrom · 7 February 2005 at 12:17AM

I think taking the 2nd loan will simplify things a lot, removing the need for 0% or fixed for life deals and the loan interest rate is pretty competitive compared to your current cards. The Texaco card has a better fixed for life rate but I have no idea what sort of credit limit they would give you. Maybe someone else can come up with more/better advice but I would say that if you take the 2nd loan, you must get rid of the cards. At the very least, get rid of all but one and ring up and reduce the credit limit on it to say £500, then keep it for purchases that you want to protect or emergencies.

Remember, you will have loans for over £40,000, thats a hell of a lot of money. But, if you are sensible and stick to your guns, you'll have the biggest payrise of your life in less than 5 years time.

Should I clear all CC with loan???

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