Credit union loan - way out?

fergyxx

I know a lot of people advise against debt consolidation loans, but I am seriously considering a loan from a credit union, as a way to get me back on my feet, and try and get out of debt.

I have around £5000 spread across 4 credit cards, and I have tried using the snowball calculator, but I feel as though I'm getting nowhere, as my balances are only reducing ever so slightly.

I have completed the application to join my local credit union, who allow you to borrow up to £5000 regardless of your credit rating etc - i.e. based on affordability. I have did a repayment calculator, and by taking a loan with them, my monthly repayments would be less than what I am paying at the moment, and I would also feel as though I was getting somewhere, as my balance would start to reduce a bit more noticably.

What are your experiences of credit unions? To me, it sounds like a very viable solution.

Another aspect I was wondering about was how it might affect my credit rating? I checked my score fairly recently, and one of the things going against me was the fact that I had a relative amount of debt, spread across several different cards. Would it improve any over the next year or 2 if I close all of my credit cards and simply work on the loan repayments?

Thanks for any advice you can offer me.

fergyxx

Scarlett1212 wrote: »

I am a member of Glasgow Council Credit Union and I think they are a great thing, although unfortunately I can't use them to borrow at the moment as I am not earning, I have done in the past and I thought they were great. The interest rates aren't fantastic but they're not bad (particularly compared to some CC rates) and theres no fee if you decide to overpay. Also, they are more accessible and sympathetic than a bank. However thats only my experience of one particular Credit Union. Hope it helps - and although I'm new, this would only work if you stopped spending on the credit cards - or you could end up in even more debt (speaking from experience here!!!)

Thanks.

I live about half an hour away from Glasgow, and I work in Glasgow, so I was considering joining this one, but there is another one called Scotwest, which I can join as I live in the area, and although there's not much difference, they do have a slightly cheaper loan rate.

How do they go about lending you the money? On the web for Scotwest, it says you can apply to borrow any amount - regardless of your savings and can repay up to 5 years. The interest rate is fixed at 9.9% regardless of your circumstances/credit rating etc.

I fully intend to destroy and close my credit accounts - apart from maybe one, but I will lower the limit on it to something far more affordable.

beanielou

I think credit unions are just fab.
This would only work for you if you closed down your credit card accounts once you paid them off using the CU loan money.

rachaelfleur

I've heard some great stories about credit unions. I was going to join one and take a loan to consolidate but decided to go with a DMP instead, just because the extent of my debt. The good thing about taking a loan from a credit union is whilst you're paying back the loan you're also saving too, so when you've finished repaying you have a bit of savings too. I would recommend you take a loan with them, although I would suggest cutting up those credit cards too (i've took a loan once to consolidate but just respent the lot, hence my messy situation at the moment)

5limJim

rachaelfleur wrote: »

I've heard some great stories about credit unions. I was going to join one and take a loan to consolidate but decided to go with a DMP instead, just because the extent of my debt. The good thing about taking a loan from a credit union is whilst you're paying back the loan you're also saving too, so when you've finished repaying you have a bit of savings too. I would recommend you take a loan with them, although I would suggest cutting up those credit cards too (i've took a loan once to consolidate but just respent the lot, hence my messy situation at the moment)

that last bit sounds worryingly familiar

rachaelfleur

5limJim I guess we're not the only ones familiar with that situation! Still not sure what I spent it on but I know I spent it! Never again will I be so stupid!

5limJim

rachaelfleur wrote: »

5limJim I guess we're not the only ones familiar with that situation! Still not sure what I spent it on but I know I spent it! Never again will I be so stupid!

yeah i know exactly what you mean there as well, paid it off, had an empty card, now i've got an almost full card, and for the life of me i cant see what i spent it on (except maybe my holiday in NYC)... problem is the little spends here and there that you dont realise "ah, its only £50/£100, i can pay that off no bother" but when you add it to all the other £50/100's.....nightmare, i reckon we're learning our lessons ;-)