Card tart advice required - Help!

Derek_Trotter_2

Hi all. I've got some serious card debt that I need some advice with.

I have five credit cards, with a total of just over 10.5k balance.

Here they are:

MBNA balance £2000, credit limit £3000, interest rate 22.5apr
Barclaycard balance £1000, credit limit £5400, interest rate 18.9apr
Lloyds TSB balance £4500, credit limit £5000, interest rate 17.9apr
Amazon balance £1500, credit limit £1700, interest rate 0% for next 6 months
Halifax balance £1400, credit limit £1500, interest rate 15.9apr

I've been paying mostly minimum payments on all of these for ages, but currently have an extra £100 per month I can use to pay off a balance. I've just got the Amazon card to try and help with this; I've used it to transfer some balances and cut it up, too.

I've just been written to by Barclaycard, with an offer of two balance transfer cheques - one for 0% for six months, the other for 6.9% for the life of the balance.

I figure that the best thing for me to do here is move my MBNA (the most expensive APR) balance to the Barclaycard, and £2000 of my Lloyds TSB balance. I think that because I cannot expect to pay off a whole £5000 anytime soon, it would be better to keep the bulk of it on Barclaycard at the relatively low interest rate of 6.9%, and chip away at the rest of the debt with my extra £100 - paying it off the card with the highest interest rate.

I also figure that when my Lloyds TSB balance is well below my credit limit, they will (based on past experience) offer me a similar deal to what Barclaycard have just offered, thus furthering my opportunity to reduce my interest.

Does this make sense to any of you experts out there? Can anyone think of a better way to reduce my interest or debt?

Please bear in mind the fact that I also have other debts which cannot be moved, and my credit scoring ain't too hot.

YorkshireBoy

Derek_Trotter wrote:

MBNA balance £2000, credit limit £3000, interest rate 22.5apr
Barclaycard balance £1000, credit limit £5400, interest rate 18.9apr
Lloyds TSB balance £4500, credit limit £5000, interest rate 17.9apr
Amazon balance £1500, credit limit £1700, interest rate 0% for next 6 months
Halifax balance £1400, credit limit £1500, interest rate 15.9apr

How about...

1. Ask for a credit limit increase on Barclaycard first
2. Move the £1,400 Halifax balance to Barclaycard
3. Move the £2,000 MBNA balance to Barclaycard
4. Move whatever you can of the LTSB balance (min £1,000) to Barclaycard
5. Close down Halifax and ensure marked as settled on CRA report
6. Close down MBNA and ensure marked as settled on CRA report

This way you finish up with only 3 cards, albeit all relatively maxed out. Your choice on whether to go for the 6.9% LOB or 0% with Barclaycard. Might be better with the LOB so that you can concentrate on getting a 0% card to transfer the remaining LTSB balance to when things have settled down with your credit report in a month or two.

In the meantime, throw all your spare cash at the card(s) with the highest APR in standard snowballing style.

PS: your credit rating can't be all that bad if you've just got a 0% card, and one from the same stable as a card you've already got.

Good luck.

ti1980

My MBNA card has an interest rate an a whopping 24.9% which I was paying before I was told about this wonderful site. After getting some great advice and an email template off fellow MSE'ers (to whom I will be eternally grateful) and after emailing/writing to them they offered me a balance transfer rate of 5.9% for 6 months.

I also managed to get the same from HSBC so I balance transferred my balance to MBNA so that account was at 0. MBNA then phoned me up a few days later and offered me a balance transfer rate of 2.9% for 6 months. So from paying 24.9% APR I'm now paying 2.9% and that balance is soon to be cleared. Yay.

Hope this helps you. I have heard from other people that you can get a low BT rate from MBNA cards when you clear your balance so it might be worth holding onto. They told me on the phone that if I was to BT more money then the rate could go down to 1.9% or even 0.9% for very high amounts.

If you can get another 0% card though then that would be fab.

Derek_Trotter_2

Thanks for the advice guys.

I'm divided on the benefits of closing the accounts which I can clear the balances from. On the one hand, my credit rating could improve. On the other hand, those card providers, when the balance is right down, will probably want to keep me by offering me more attractive BT rates, and it could be tricky to get new cards with 0%.

What to do?...

Does anyone know if its possible to put this post/thread in the problem debt section as well as the credit card section?

YorkshireBoy

Derek_Trotter wrote:

I'm divided on the benefits of closing the accounts which I can clear the balances from. On the one hand, my credit rating could improve. On the other hand, those card providers, when the balance is right down, will probably want to keep me by offering me more attractive BT rates, and it could be tricky to get new cards with 0%.

Derek, the benefit of my suggested course of action is two-fold...

1. You said you had other debts that couldn't be moved, so presenting a credit report containing only 3 cards is surely better than one with 4 or 5 to your next lender?

2. I'm not sure about Halifax, but certainly with MBNA cards, many people on here report being offered a special deal by their loyalties department when calling to cancel the card. Getting this would be a bonus for you.

Why would it be "tricky" to get new 0% cards? Have your circumstances changed since you got the Amazon card?

Derek_Trotter_2

I'm presuming that it will become trickier to get more cards as time goes by; I've had three credit cards in the past as well as three storecards. I suppose what you're saying is that if accounts are closed once balances are cleared, my chances of getting more 0% deals will improve because I have less credit available to me?

Circs haven't really changed since the Amazon card arrived. I'm just worried that I might run out of 'chances', and that by keeping existing cards, I may get opportunities for deals from those lenders which I might not find by applying elsewhere.

As far as my credit history's concerned, I just had to sell a house and buy a flat to knock about a third off my debt and make it remotely possible to eat into it. I still have about £15k in a repayment scheme to an ex-bank, £7k to pay off a loan. When I say I, this means we - me and my partner. Although we've never had any defaults or CCGs, we had loads of late payments. I was actually very surprised to get the Amazon card because of all this; I didn't think we had a chance.

YorkshireBoy

Derek_Trotter wrote:

I suppose what you're saying is that if accounts are closed once balances are cleared, my chances of getting more 0% deals will improve because I have less credit available to me?

Exactly! But crucially, as well as closing them you need to make sure the provider marks them as 'settled' on your credit file. This will show future lenders that this line of credit is no longer open to you.

If you need general advice on managing your debt, you might want to post in the debt-free wannabe forum.

Best of luck.

Derek_Trotter_2

Thanks.

Asked Barclaycard to increase credit limit; declined because of previous late payments.

Looking at situation, have decided to move my £1000 Barclaycard balance (currently 18.9%) to MBNA. As soon as it's gone through, I'll then move the whole MBNA balance to Barclaycard, and move the remainder of the LTSB balance to Barclaycard too, all on the LOB 6.9% rate.

Hopefully, MBNA will then offer me a good rate for BTs. If they do, I'll move the remaining £2k from LTSB to them, and £1k from my Halifax. I can then throw all available money at the £400 left on the Halifax card until its gone, close it (and settle) and be left with only four cards - Barclaycard at 6.9% LOB, Amazon 0% for the next 6 months, and MBNA at whatever they might offer. I'll keep LTSB open until after Christmas to see if they offer me any good rates, as they have done so before when my balance has been well below limit.

If I don't get a good offer from MBNA, I'll keep the card for a couple of months and hope for a good offer from LTSB. If it comes, I can then BT my remaining 2k from LTSB to MBNA, and then BT the whole lot back to LTSB at their new rate, then close the MBNA card. I can then also move my whole Halifax balance over to it, and close that card too. I'll then be left with just Barclaycard, LTSB and Amazon.

I think thats quite comprehensive, although dependent on LTSB or MBNA giving me a good offer.

If I can pull it off, I think that I'll then pump all my spare cash into clearing one of the discounted MBNA or LTSB balances - whichever has the highest APR, because although they could be very low, they will only be low on a temporary basis and will rise sharply again when the term ends, as opposed to the 6.9% Barclaycard rate that will remain the same. When the term ends, I can then have less cards and less balance to BT when I try to get another one.

Thanks for help with this; please let me know what you think.

Rafter

Just be a bit careful with Barclaycard.

They have sometimes been sneaky and refused the balance transfer back, despite having credit limts available. Having the cheque already might help as this suggests you have 'pre-qualified'

You will probably have to pay a fee to MBNA to do the transfer.

Just make sure you set up direct debits for minimum balances to all your cards. A £20 or £25 late payment fee can wipe out any benefit from reducing your interest rate.

If you can clear halifax and Lloyds and close them, suggest you wait 3 months then try applying for an Egg card or Egg money account. It would be useful to have a card that enables you to do fee free transfers, although Egg now charge during their initial introductory period.

Good luck.

R.

Derek_Trotter_2

Cheers for that. I do have the cheque; I shall use it.