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  • FIRST POST
    • Ozhelp
    • By Ozhelp 5th Jul 17, 2:43 PM
    • 3Posts
    • 0Thanks
    Ozhelp
    Need to consolidate Credit Card debts - is a Loan the best way.
    • #1
    • 5th Jul 17, 2:43 PM
    Need to consolidate Credit Card debts - is a Loan the best way. 5th Jul 17 at 2:43 PM
    I seem to have amounted a total of £12k on my two credit cards and despite trying to make the most of balance transfer 0% rates I now seem to be paying £60 interest on one credit card with the other 0% credit card ending in a couple of months. I always make the minimum payments but with the interest it doesn't seem to be doing much to the total. Due to the amount on my credit cards I am thinking about taking out a loan, it will stretch me but at least I know how much will be coming out and how often. I don't think I would get a 0% for the full amount and the cost of transferring it seems to be about the same as the loan. Any advice would be much appreciated.
    Thank you
Page 1
    • sourcrates
    • By sourcrates 5th Jul 17, 3:01 PM
    • 11,936 Posts
    • 11,421 Thanks
    sourcrates
    • #2
    • 5th Jul 17, 3:01 PM
    • #2
    • 5th Jul 17, 3:01 PM
    Hi,

    Welcome to MSE.

    The usual course of events when people can't afford there debt repayments is, first, to do balance transfers, next come consolidation loans.

    Some people may consolidate there debt numerous times, until the penny drops that it dosent always work, and then they seek a debt soloution instead, either debt management or other insolvency option.

    Do you see where I'm going with this ?
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. I'm a volunteer to help the boards run smoothly, and I can move and merge posts there.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
    • StopIt
    • By StopIt 5th Jul 17, 3:10 PM
    • 879 Posts
    • 806 Thanks
    StopIt
    • #3
    • 5th Jul 17, 3:10 PM
    • #3
    • 5th Jul 17, 3:10 PM
    I seem to have amounted a total of £12k on my two credit cards and despite trying to make the most of balance transfer 0% rates I now seem to be paying £60 interest on one credit card with the other 0% credit card ending in a couple of months. I always make the minimum payments but with the interest it doesn't seem to be doing much to the total. Due to the amount on my credit cards I am thinking about taking out a loan, it will stretch me but at least I know how much will be coming out and how often. I don't think I would get a 0% for the full amount and the cost of transferring it seems to be about the same as the loan. Any advice would be much appreciated.
    Thank you
    Originally posted by Ozhelp

    So a consolidation loan will stretch your finances, and for how long?


    A few questions:


    1: Do you have an emergency fund?


    2: Are you aware that debt consolidation loans are usually at the sub-prime end so may be at a high rate of interest?


    3: Why are you in £12k of CC debt? If you're simply living beyond your means have you addressed this?


    Read the stickies, post up an SOA and try to address this without further borrowing.
    • EssexHebridean
    • By EssexHebridean 5th Jul 17, 5:00 PM
    • 7,776 Posts
    • 40,243 Thanks
    EssexHebridean
    • #4
    • 5th Jul 17, 5:00 PM
    • #4
    • 5th Jul 17, 5:00 PM
    You don't need a loan - you need a budget and to start paying off more than the minimum payment on the cards.

    You say you "seem to have" got to the total of 12k debt - which I'm afraid suggests that you don't know how much you're spending each month are are currently using credit as a way of living a more extravagant lifestyle than you can afford. A budget will mean you start living within your means, and paying more than the minimum off the cards means you WILL start making an impact on the balance.

    use the SOA calculator on here (link in the sticky post the top of the board) and get your financial house in order. If you would like to post it into here then we can take a look, advise where you can trim your spending etc. You need to start living on your own money not borrowing from elsewhere though.
    MORTGAGE FREE 30/09/2016
    Sainsbugs 0% card: 22/12/16 £1229.00/£504.92 (29/08/17)
    • Ozhelp
    • By Ozhelp 5th Jul 17, 5:42 PM
    • 3 Posts
    • 0 Thanks
    Ozhelp
    • #5
    • 5th Jul 17, 5:42 PM
    • #5
    • 5th Jul 17, 5:42 PM
    It has been a number of things including wedding, kids, car payments and to a certain extent living beyond my means which I am addressing - I can feel the animosity coming off some of your replies and believe me I intend to pay every penny back. I am just looking for the best way of doing this and wanted some advice.

    I am looking to consolidate the amount I owe and thought the loan would be the best way so I know exactly how much I have to pay and for how long with the 0% ending soon. I would not take a loan that I couldn't afford to pay, I will just have to make sure that I stick to my budget - trust me this has been a wake up call. I just wanted to find out if my idea of the loan would be the best way.

    Thank you for your feedback.
    • -taff
    • By -taff 5th Jul 17, 5:53 PM
    • 7,345 Posts
    • 4,762 Thanks
    -taff
    • #6
    • 5th Jul 17, 5:53 PM
    • #6
    • 5th Jul 17, 5:53 PM
    You're imagining the animosity.

    No one cares if you pay your debts or not, they are worried that by using a consolidation loan you are neither noticing the xource of your debts, nor would be able to afford the repayments eventually.

    The usual scenario is, [and it has happened to nearly every poster on this board, including me, which is why they and I am warning you against it]

    you borrow money by spending a bit more on a credit card
    Then you only pay minimum payments, which makes the debt go up [repeat this excercise with several cards if necessary]
    Transfer money to 0% credit card. Pay minimum payments.
    Meanwhile, take out new card, start spending on it....
    See above...
    Get a conslidation loan because it would be so much easier to only have one payment going out...
    Pay off cards
    Keep cards open, start spending on cards....
    See above


    This what usually happens unless the person involved starts to tackle what made them spend in the first place.

    The solutions are always

    Learn to budget properly
    Live within your means

    Not one person on this board will attack you for being in debt [unless it's a troll, in which case, totally gonore them]
    You will get replies to tell you how to get out of it.
    It's up to you whether you listen or not
    • Silver Queen
    • By Silver Queen 5th Jul 17, 8:26 PM
    • 142 Posts
    • 715 Thanks
    Silver Queen
    • #7
    • 5th Jul 17, 8:26 PM
    • #7
    • 5th Jul 17, 8:26 PM
    I may be missing a trick but can't you just sit down and work out how much you're paying each month, to find out how much you're paying each month, which seems to be a big reason why you want to get the loan? I don't mean to be rude but it seems like a straightforward solution to me. At the end of the day it's your choice whether to consolidate but generally it doesn't work. If you are very disciplined and don't spend on the cards again, it could work. Only you know yourself well enough but there are many horror stories so if you decide to take the plunge make sure you do it with your eyes wide open.
    Debt Totals 01/07/17:
    £350 Natwest Credit Card / Now £0 £15,500 Loan from Parents / Currently £12,500 £2,000 Overdraft Now £1,000
    • Silver Queen
    • By Silver Queen 5th Jul 17, 8:27 PM
    • 142 Posts
    • 715 Thanks
    Silver Queen
    • #8
    • 5th Jul 17, 8:27 PM
    • #8
    • 5th Jul 17, 8:27 PM
    Or, alternatively, are you still being offered 0% deals? You could see if you could do a balance transfer.
    Debt Totals 01/07/17:
    £350 Natwest Credit Card / Now £0 £15,500 Loan from Parents / Currently £12,500 £2,000 Overdraft Now £1,000
    • DCFC79
    • By DCFC79 5th Jul 17, 8:34 PM
    • 29,965 Posts
    • 18,976 Thanks
    DCFC79
    • #9
    • 5th Jul 17, 8:34 PM
    • #9
    • 5th Jul 17, 8:34 PM
    It has been a number of things including wedding, kids, car payments and to a certain extent living beyond my means which I am addressing - I can feel the animosity coming off some of your replies and believe me I intend to pay every penny back. I am just looking for the best way of doing this and wanted some advice.

    I am looking to consolidate the amount I owe and thought the loan would be the best way so I know exactly how much I have to pay and for how long with the 0% ending soon. I would not take a loan that I couldn't afford to pay, I will just have to make sure that I stick to my budget - trust me this has been a wake up call. I just wanted to find out if my idea of the loan would be the best way.

    Thank you for your feedback.
    Originally posted by Ozhelp
    I cant see you will get a loan.

    You need to look at your spending, maybe a dmp is an option, other posters on here can advise what your options are.
    Can people stop loaning money/being a guarator to family/friends, it rarely ends well and you lose out as your money is gone or you get shafted with being a guarantor.
    • middleclassbutpoor
    • By middleclassbutpoor 5th Jul 17, 9:27 PM
    • 25 Posts
    • 44 Thanks
    middleclassbutpoor
    Not sure going for a DMP is something to be considered.

    Need to so a SOA to understand income/expenditure which if the OP wants to do then more help can be given.

    Consolidating is a bad idea as i have learned. You will consolidate, create a bit of breathing space, get increase in pay, feel you can afford a bit more. The best advice has been given already in that you should forget what you think is the right course for the time being and explore whether you can get your budget sorted.

    If you could prove that you have the underlying issue sorted, then possibly (but unlikely) you may want to consider a loan. As you reduce the balance, you will find 0% transfers will open up etc.
    • enthusiasticsaver
    • By enthusiasticsaver 6th Jul 17, 12:10 AM
    • 4,254 Posts
    • 7,684 Thanks
    enthusiasticsaver
    Consolidating is a bad idea. The reason why your debt is not decreasing is because you are only paying minimums. If you are struggling with this then an expensive loan will make matters worse. You are unlikely to get a good rate if you are overcommitted.

    The best way to get yourself out of debt is to look at your spending, set a budget and stick to it. Ditch the credit cards, get into the savings habit, first for emergencies and for things like annual bills, holidays, car expenses, Christmas etc. Anything you would normally stick on a credit card start to budget and save for in the future. £12k debt is manageable. Taking out a loan is a sure way of delaying the inevitable which is to live within your income.

    Good luck.
    Countdown to early retirement on 21.12.17 3 months to go.
    • StopIt
    • By StopIt 6th Jul 17, 8:06 AM
    • 879 Posts
    • 806 Thanks
    StopIt
    It has been a number of things including wedding, kids, car payments and to a certain extent living beyond my means which I am addressing - I can feel the animosity coming off some of your replies and believe me I intend to pay every penny back. I am just looking for the best way of doing this and wanted some advice.

    I am looking to consolidate the amount I owe and thought the loan would be the best way so I know exactly how much I have to pay and for how long with the 0% ending soon. I would not take a loan that I couldn't afford to pay, I will just have to make sure that I stick to my budget - trust me this has been a wake up call. I just wanted to find out if my idea of the loan would be the best way.

    Thank you for your feedback.
    Originally posted by Ozhelp

    The only animosity is towards consolidation loans, which should be filtered on MSE as bad as any other swear word here.


    It's kicking the can along the road, and if you address why you're in debt, you will not need them.


    Consolidation Loans are a form of Extending and Pretending. Extending your time in debt and pretending that it's now cleared so you don't need to worry about money any longer.


    That's why it's key to make an SOA, not for our benefit, for yours. Get everything laid out, find where your spending goes and find ways to make "easy wins" to lower spending at low personal cost to you. That way you'll be able to snowball your debts and clear them faster, which should be the goal.
    • Ilona
    • By Ilona 6th Jul 17, 10:30 AM
    • 1,873 Posts
    • 6,433 Thanks
    Ilona
    Agree with the above, you don't need to consolidate, you want to. There is no animosity at all, we only want to help you to get yourself out of the situation, and work towards paying off your debts, rather than move them around.

    If you fill in a Statement of Affairs the good people on here will have a clear picture of where you're at, and can make helpful suggestions on how you can decrease your spending to free up more money to pay the debts. It's as simple as that. No need to borrow more money.

    http://www.stoozing.com/calculator/soa.php

    Ilona
    I love skip diving
    • EssexHebridean
    • By EssexHebridean 6th Jul 17, 11:06 AM
    • 7,776 Posts
    • 40,243 Thanks
    EssexHebridean
    As others have said - you're confusing animosity with bald statement of facts. we tend to react quite hard and fast to people talking about consolidation for one simple reason - we KNOW that in the vast, vast majority of cases it WILL NOT WORK. Have a browse around the diaries on here and you'll see what a high proportion of those stem from a debt, more debt, consolidation, more debt, more consolidation cycle. Our aim is to try to stop people going that route by helping them to find the right way out the first time, and by getting them to educate themselves with the skills they need to not get back into the cycle.

    SOA > Budget > live with budget > tweak budget where needed > pay surplus money each month against the cards = solution to your situation.
    MORTGAGE FREE 30/09/2016
    Sainsbugs 0% card: 22/12/16 £1229.00/£504.92 (29/08/17)
    • Ozhelp
    • By Ozhelp 7th Jul 17, 8:34 AM
    • 3 Posts
    • 0 Thanks
    Ozhelp
    Thank you for all your responses, I really do appreciate them and I completely understand that consolidation loans are dangerous. My only problem is that I am already paying interest on one of my credit cards and the other one is due to finish shortly. I don't think I would be able to get a 0% credit card for the total amount or for as long as I would need it. And with the interest rates set to soar I am a little scared that it is going to spiral if I don't fix it.
    Having looked at the loans it looks like I would be paying less interest and then could actually start seeing the debt decrease and at least know when I would be out of this debt.
    • StopIt
    • By StopIt 7th Jul 17, 9:47 AM
    • 879 Posts
    • 806 Thanks
    StopIt
    Thank you for all your responses, I really do appreciate them and I completely understand that consolidation loans are dangerous. My only problem is that I am already paying interest on one of my credit cards and the other one is due to finish shortly. I don't think I would be able to get a 0% credit card for the total amount or for as long as I would need it. And with the interest rates set to soar I am a little scared that it is going to spiral if I don't fix it.
    Having looked at the loans it looks like I would be paying less interest and then could actually start seeing the debt decrease and at least know when I would be out of this debt.
    Originally posted by Ozhelp

    1: The APRs you're seeing are representative, and unless if you're lucky, you wont be getting them. When the question "What are you borrowing for" appears, answering "To consolidate my debts" will kill your chances stone dead. Lying will risk worse, so don't do that either.


    2: Even so, APR is cumulative. A nominally lower APR over a longer period actually can mean you pay more interest overall.


    3: You'd still be in the same amount of debt, only for longer. That's not a win.


    This is why you need to create an SOA and find a way to snowball the debts. Apply for any 0% transfers you can, and go from there. Even getting 20% of the balance on 0% offsets any likely saving you'll get on a loan APR if you save overall AT ALL.


    Your problems you state are not reasons to go for a consolidation loan, and you've been conditioned by the advertising that these loans "clear" your debts. They don't. And remember, if at any point during this loan if you are short or have an emergency spending need, you'll need to borrow again. That's why you need to take the pain now, and stop the debt cycle.


    Forget a loan, get applying for a 0% CC of any amount you can, and find ways to save as much budget wise to throw at the debts to get them gone.
    • zippygeorgeandben
    • By zippygeorgeandben 7th Jul 17, 10:09 AM
    • 661 Posts
    • 755 Thanks
    zippygeorgeandben
    I'm going to find you a link to my own thread. Read it from start to finish and see if you can see any similarities!
    End Sep 2016 End August 2017
    £8236.57 £4876.49
    (Tesco 4.8%) £222.61pcm
    £6185.75 £851.34 (Zopa 4.0%) £48.99pcm

    £5344.50
    £2890.04 (Sainsburys 0% until 06/19) £140pcm
    £2000.00 £1333.35 (Sister 0%) £133.33pcm

    Total debt
    £19.766.82 £11499.70 Original DFD May 2019.
    • zippygeorgeandben
    • By zippygeorgeandben 7th Jul 17, 10:10 AM
    • 661 Posts
    • 755 Thanks
    zippygeorgeandben
    http://forums.moneysavingexpert.com/showthread.php?t=5567669

    Please take five minutes out to have a read with a cup of tea. Post 1 is asking for what loan should I take out to consolidate debt. I hope it helps
    End Sep 2016 End August 2017
    £8236.57 £4876.49
    (Tesco 4.8%) £222.61pcm
    £6185.75 £851.34 (Zopa 4.0%) £48.99pcm

    £5344.50
    £2890.04 (Sainsburys 0% until 06/19) £140pcm
    £2000.00 £1333.35 (Sister 0%) £133.33pcm

    Total debt
    £19.766.82 £11499.70 Original DFD May 2019.
    • ReadingTim
    • By ReadingTim 7th Jul 17, 1:04 PM
    • 2,000 Posts
    • 2,917 Thanks
    ReadingTim
    http://forums.moneysavingexpert.com/showthread.php?t=5567669

    Please take five minutes out to have a read with a cup of tea. Post 1 is asking for what loan should I take out to consolidate debt. I hope it helps
    Originally posted by zippygeorgeandben
    It's also worth adding that zippygeorgeandben had a similar reaction to the OP's when told he was living beyond his means. Luckily, he's seen the light and now thinks otherwise...
    Last edited by ReadingTim; 12-07-2017 at 9:04 AM. Reason: typo
    • TheMoonandBack
    • By TheMoonandBack 11th Jul 17, 1:08 PM
    • 13 Posts
    • 9 Thanks
    TheMoonandBack
    Ozhelp, all the answers are here. I have lurked behind this forum for years but eventually woke up to the advice posted to others over and over again.
    I owed £53k at it's peak. I have been down the spiral, cc's, 0% transfers, pcp car finance, consolidation etc etc and my debts kept going up.
    The only answer is to address your spending and throw money at your existing debt like there is no tomorrow.
    The key for me was emergency fund, then - BUDGET, I allocated a minimum amount to pay towards my debt each month and then any extra ( overtime, selling stuff, money as presents, coins found on the pavement, anything) pay towards the debt. Be honest with your family and take some short term pain. We had no holiday for 3 years, ran an old car and cut out pretty much all luxuries.
    The result is I have hundreds of pounds surplus each month now, and we are going on a really nice holiday paid with actual, not borrowed, money.
    What woke me up was being declined for a consolidation loan, I thought sod this for a lifestyle and just aggressively paid towards the debt I had.
    Once you break the minimum payment trap the fun starts !
    Good luck
    When you get to the end of your rope, tie a knot and hang on

    Proud to be dealing with my debts
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