Help clearing credit card debt please

dragonfly02

Hi there,
My partner currently has a santander zero card, He has had it for 12 months and now owes £3500 and we are trying to work out the best ways to reduce this debt as soon as possible

I'm new to all this so have no idea of the best thing to do, He has been offered a 0% halifax credit card with a limit of £2600 for 9 months, I'm not 100% how to work this.

Our current min payment on the zero card is £80 per month

Can anyone please offer help? Is a 0% balance transfer the best thing to do or is there another alternative?

All advice is gratefully recieved

Dragonfly

Simon_Preston

A 0% balance transfer is without doubt the cheapest way of going about it. Virgin offer 0% for 16months with a 2.98% fee which would bring your total debt up to £3604.30. They also tend to be quite generous with their limits.
Should you take up Halifax's offer (and its a good offer) you could transfer probably about 90% of the Halifax's cards limit then try and transfer the remaining to another card.
As long as you can afford at least the minimum repayments each month then you can carry on chipping away at the debt. If you can't then you need to start looking at debt management plans.

And remember the golden rule. Never ever spend on a balance transfer card.

Hope any of that helps.

dragonfly02

Sounds like a plan, Thanks Simon.
Having looked through the terms on the halifax offer it says it's 0% for 9 months but on the reverse of the paperwork it says that interest on balance transfers is 14.88% per annum, Does this meanafter the 9 months we will be charged 14.88%?
Sorry to sound so dim but I wanna make sure I have my information right, Also my partner already applied to virgin who turned him down but he applied for a straight out balance transfer for the full £3500.

Shall we just take the halifax £2600 offer and continue to pay the outstanding £900 balance on the zero card and pay as much as possible on the new halifax card or is it best to now keep trying to get another 0% card and transfer the last £900??

Simon_Preston

dragonfly02 wrote: »

Does this meanafter the 9 months we will be charged 14.88%?

Yes.

Shall we just take the halifax £2600 offer and continue to pay the outstanding £900 balance on the zero card and pay as much as possible on the new halifax card or is it best to now keep trying to get another 0% card and transfer the last £900??

Take up Halifax's offer and try for another 0% card. If you can't get one then pay off as much as possible on the Zero card, as that has the higher rate of interest, until cleared.

dragonfly02

Ok I want to try and get this as clear as possible in my head before we actually commit to it, At the moment our payments are as follows

£3500 outstanding debt
£80 min payment.....£50 interest/£30 off debt
= £30 over 9 months £270 paid....new balance £3230

Balance transfer to halifax 0% for 9 months
£2600
£80 payment....0% interest
=£720 repaid....new balance £1880
Is there a way to work out the min payment after the 9 months when the rate changes to 14.88?

Surely if we managed to then get another card for the additional £900 we would have to spread the £80 payment between 2 cards and after the 9months term we would be in the same position with 2 payments to make????

Gosh, the more indepth it gets the less I understand it hee hee

YorkshireBoy

dragonfly02 wrote: »

Is there a way to work out the min payment after the 9 months when the rate changes to 14.88?

Calculate the monthly interest...£1,880 x 1.2372% = £23.26

Add this to the balance...£1,880 + £23.26 = £1,903.26

Take 1% of this...£1,903.26 x 1% = £19.03



Where 1.2372% is the annual non-compounded interest rate (14.88%) divided by 12

dragonfly02

Lmao that's confused me even more, So what would the monthly min payment be? and does this amount come down each month seeing as my overall borrowing will be coming down each month?

I know soooo many questions but I'm determined to understand this.

CLAPTON

firstly the quickest way to pay off your credit card is to increase the amount of your payment ... £80 on a 3500 debt is not alot. So try to reduce your outgoings so you can pay back more.

secondly... obviously paying no interest (allowing for BT fees of course) is better than paying intererst so you will overall pay the debt of quicker if you are paying no interest.

thirdly.. your calculations seem a little unclear... if all you are able/willing to pay is 80 then you can't pay the full 80 to the Halifax card as you still have to make at least the minimum payment of the 900 still on the santander card

YorkshireBoy

dragonfly02 wrote: »

So what would the monthly min payment be?

I've edited my post to make it a little clearer for you.

and does this amount come down each month seeing as my overall borrowing will be coming down each month?

No, your balance, along with the minimum payment, will increase each month. Why? Because they're adding 1.2372% interest yet only taking 1% of the new balance.

Minimum payments are bad news (in your circumstances with an interest bearing balance).

dragonfly02

Lovely job guys, We do have around £170 that we can pay on these credit cards but at the moment our min on the santander card is £80 but I used the £80 as an example to try and help me understand it all.

So in short, Transfer £2600 to the halifax and try to transfer the additional £900 to another 0% card, However if we are unable to do this we will still end up paying off the debt quicker, I'm not so worried about making our monthly outgoings on ccards as low as possible, it's more about clearing this debt asap

Thank you so much for all your help, I knew this was the best place to post for advice

YorkshireBoy

dragonfly02 wrote: »

So in short, Transfer £2600 to the halifax

BTs to Halifax are restricted to 90% of your credit limit, so £2340 in your case.

Just out of interest, did your partner apply for this card or was it offered to him as 'pre-approved'? If the former, why didn't he go for the Plus card since that has 13 months 0% on BTs.