Do you have to stick to high rate ccs if you can't get further credit?

mookett · 5 February 2005 at 5:05PM

Hi everyone.

My husband has one cc and so do I, they are both near their limit and have quite bad rates. Mine is a student barclaycard (but now I don't work so I can't apply for another), husband's is 18.9% but he has defaults and I don't think would be able to get anything else. We also have a car loan.

We think we can pay the minimum payments (with some cutting back), but is there nothing else we can do? Should we try and apply for a loan with a lower rate? Do we just stay as we are?

One option we thought of was to remortgage. At the moment we have a nasty interest rate with our mortgage due to his defaults, but this comes to an end in December, and at this point he should not have defaulted for 2 years. Should we put these amounts onto our mortgage in December? Will we even get a better rate after 2 years with no defaults??!

barclayard approx £2000
husbands cc approx £3000
car loan approx £4000

Thanks for listening...

Finishrich · 9 February 2005 at 9:28PM

I know you say you're not working just now, but have you tried to apply for another CC. Even if it's one with a life of balance transfer rate, it will certainly be a lot less than 18.9%. Paying minimum payments on the current cards will take a long time to pay off.

You might find more help in Martins Article on Credit Cards on the Main Site Click Here

Hope that helps a bit.

Might be worth phoning up your existing credit card companies and ask if they'll redue the interest rate. Worth a try the worst they can say it no.

mookett · 10 February 2005 at 8:18PM

Thanks for replying. If I were to apply for another cc, wouldn't I just get turned down because I have no income? Well, I sort of do as my husband's salary gets paid into my account, but it's his income not mine.

I don't want to damage either of our reports further, you know?!

Conor_3 · 18 February 2005 at 6:00PM

If he's got defaults then the damage is already done HOWEVER on the bright side you've already bought your house so you've no worries about getting a mortgage.

ASSUMING YOU CAN'T GET ANOTHER CREDIT CARD WITH 0%/lower APR.
======================================================

You need to set out a budget which doesn't include the car loan and credit cards as outgoings..

Work out how much money you have left over. Set aside some of that for contingencies/savings. What is now left is what you can afford to repay.

Next, and the hardest part, is going to involve you eating a bit of humble pie. Phone up the credit card/car loan companies. Explain you're living beyond your means. Ask them if it would be possible for them to freeze the interest and set up a fixed monthly repayment plan. THat way you'll only end up paying back the current amounts you posted. If you put them on the mortgage then that £2000 Barclaycard debt will cost you £4000 in repayments by the end of the mortgage period. Far better to pay back £2000 over a shorter period.

As a final note...

Borrowing to get yourself out of debt only digs a bigger hole. Re-mortgage by all means but only to go to a lower interest rate. DO NOT BORROW MORE. Also if you've only 20 years left on the mortage, only apply for a remortgage over 20 years. Some people constantly remortgage but start the new mortgage off with yet another 25 year term so in effect all they're doing is paying rent as they never really pay anything significant off the capital.

Do you have to stick to high rate ccs if you can't get further credit?

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