Loan Advise Please

gamma

Hi

I have some debt at the moment,

Eggmoney Card - £1000 @ 14.9%
Marks & Spencer - £2900 @ 0% till Jan 06
Intellegence Finance - £700 @ 0% till Jan 06
Barclays Overdraft - £1400
Barclaycard - £400 @ 17.9 %

Barclays says im pre approved for a loan to £25 000 @ 7 % I think

What would be the best approach to start managing this debt? At the moment Im paying it all minimum amounts and my salary clears my overdraft but at day 1 I start back with the overdraft again!

And i cant stop spending!!!

HELP!!!

Seriously I know I need to stop the spending and I will, but I need to know what would be the best approach to clear the debt and will the barclays loan work for me and is it the best

Any help appreciated!!

[Deleted User]

Until you actually STOP spending you will not clear the debt. If you are serious about clearing the debt then by stopping your spending you WILL do it.

Try and get as much of your debt as possible onto 0% cards. CUT THOSE CARDS UP AND NEVER SPEND ON THEM.

If you cannot move the other debts onto 0% cards then you should consider targetting those which are racking up the most interest first and just paying the monthly minimum on the 0% ones.

Once you have cleared the debts that are not on 0% interest then you can concentrate on the rest.

Don't forget that you will need to be vigilant about the debts that ARE on the 0% as these will periodically need to be shuffled over to new 0% cards.

I suggest you work out how much you can afford to pay towards your debts each month AFTER you have worked out what you need to live on. By live on I do not mean Sky, mobile phones etc...

Set up a direct debit on your 0% cards for the minimum payment each month (that way you cannot be late with a payment and end up incurring huge charges) - and then start putting whatever you can afford towards the rest.

You might also try getting another 0% card where you can balance transfer for free, you Egg and Barclaycard amounts. If your credit limit is high enough you may be able to transfer the other two 0% balances as well making just one larger balance on a 0% card.


good luck

gamma

sound advise... anyone else?

Can you recommend any 0% cards? and should I do this now or at the End of Jan?

newmum1

hi gamma,
firstly if im correct why would you want a loan from barclays for £25,000 when your debts are only £6,400. you really need to stop spending before you can do anything else. thinking that your best bet would be to try to BT or if you cant do that then pay off the ones with higher interest. hope this will help.

Magentasue

I would suggest finding a new 0% credit card to transfer as much of your debt to - you need to look at the APRs for your present 0%s and transfer the highest interest balances.

Then put the figures into the snowballing calculator on https://www.whatsthecost.com and start clearing those debts.

But ... for the long term, you need a budget that you stick to. List your outgoings including your repayments and match it to your income. Only spend from what you earn, don't use credit cards, only spend what you have allowed for in your budget. Otherwise, as fast as you clear one debt, another will build up. Guess how I know this!

YorkshireBoy

gamma wrote:

Can you recommend any 0% cards? and should I do this now or at the End of Jan?

Assuming your salary, current debt, and credit history/report will support it, and you don't already hold an MBNA card, apply for a Virgin card now (0% for 9 months) and use one of their credit card cheques to pay yourself enough to cover all your debts. This is called a super balance transfer, and Virgin will charge you a £50 (2% but capped at £50) fee for using the cheque.

Then settle all your debts from your current account using your debit (switch) card. Finally, CUT THE VIRGIN CARD IN TWO because, as it's a BT card only, you shouldn't make any purchases on it as they'll incur 15.9% APR from day one. If you haven't got cash in your pocket or in the bank - go without!!!

When you read the Virgin T&C's (and you WILL won't you?) you will see that the minimum payment during the introductory period is only £5/month. I would STRONGLY recommend NOT taking this unique (to MBNA) option for your payments and continue to pay (AS A MINIMUM) the total of what you paid before in servicing all your debts. Then, when you've started to see some savings from sticking to your new budget, make additional ad-hoc payments as and when you can afford them.

A closing word on the £5 minimum payments with Virgin. It's quite possible to transfer £6,900 to your current account now (via the aforementioned super balance transfer) and, by taking the irresponsible route and paying only £5/month, finish up with a residual debt of £6,860 when the 0% runs out next summer. This would be very foolish indeed.

Good luck with the plan.

**IMPORTANT**
My suggestion to consider using the Virgin cheques is based on my understanding of the current T&C's. You must DO YOUR OWN RESEARCH.

See the "What is a super balance transfer?" article here...

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1085355871,12390,

gamma

Thank you that is very informative.

Now the other thing is I got £3000 from marks and Spencer credit, but just wondering if I will get a small limit from Virgin.
Total Credit and I earn £18000 per annum
Barclaycard - £4600
Marks and Sp - £3000
IF - £700
Overdraft - £2500
Capital one £800
Egg £1500

So I might be at my max credit limits - How can I assure that I get a good limit from Virgin?

And also I know the loan is for £25000 pre approved but dont obviously have to loan that much.

Thanks again for all your help

YorkshireBoy

gamma wrote:

How can I assure that I get a good limit from Virgin?

By carrying out a bit of housework and tidying up your credit report/file before applying.

Get hold of your £2 statutory reports, and check what's on them. Have you any available credit that you've forgotten about? What you then need to do is have a good spring clean, for example...

Barclaycard - you have a large amount of "available" credit on this card. Call them to reduce it to, say, £1,000.

Capital One - where did that one spring from? Close it down if there's no balance, and make sure it's marked as settled on your credit reports. Have you any more that you've forgotten about?

Overdraft - if it's reported to the credit reference agencies, get it reduced by as much as you dare (if it's not reported, it doesn't matter). Remember the penalties for exceeding your agreed overdraft can be very severe, both in interest and fees so leave yourself a little bit of room here.

Make sure all the above alterations are showing on your report before making the Virgin application.

So, we've just reduced your available credit by nearly £5K. The best case (if your overdraft is not reported) scenario now is that you've got £5.5K of available credit and around £5K of it is used. I would have thought that, if everything is OK with the employment situation, you're on the electoral roll, you've no bad history with defaults or late/missed payments, etc, then you should be able to get a reasonable limit from Virgin - and possibly enough to carry out the full plan above.

If you don't get enough, and an appeal is unsuccessful, then you'll have to re-assess the plan and pay off the highest debts as a priority.

Best of luck.

gamma

Well just got declined from Virgin - sod em
not too bothered - going to cut up all my cc's and take the loan from barclays - atleast this way i know what i have and where its going!

Officially stopped spending as of today!

Magentasue

Gamma,if you really have stopped spending you could clear your debts by snowballing (see earlier posts). It seems you have decided to consolidate - I would advise against borrowing more than you owe, maybe borrow less and pay off some debts. But this will mean a higher APR if the 7% is for £25,000 - have a look at the Debt Free Wannabe board for some ideas on how to snowball.

Rafter

It is highly unlikely that you would get £25k from Barclays if you are only earning 18k a year.

Check their offer. It probably says something like 'pre-approved to apply' which is very different and the 7% APR is 'typical'.

A loan does force you to start repaying your debt, but if you don't remove your cards out of temptations way after paying them off you will simply get yourself into more debt.

You need to start living within your means if you are serious about being debt free.

I think you will have more luck getting another card if you reduce the limit on your Barclaycard. Following a rap on the knuckles by the treasury select committee, banks are not lending more than about 50% of salary on credit cards and you are up to that limit already (with your full barclaycard limit). Get it reduced and someone may lend to you again.

Good luck.

R.