Stupid silly situation i'm in with credit cards

grex9101

I've been rather silly with regards to my credit card spending and kinda need advice as to how to proceed from here/best way of paying them off. I'll list what I owe first:

Co-op clear card (9.9%) - Current balance £886.69, limit £1000 (min 2%)
First Direct Gold Visa (15.9%) - Current balance £3784.74, limit £4000 (min 3%)
Barclaycard platinum (17.9%) - Current balance £7218.43, limit £7500 (min 2%)

I've been sent two cheques from barclaycard offering me a BT rate of 6.9% for life with no transfer fees, and it looks good, but i don't have any "space" to move the money off the barclaycard then back on if you know what i mean.

To compound my predicament, I cannot apply for a 0% card from anyone, as I am currently "between addresses", and therefore not on the electoral roll.

I've been chucking £300 to the cards each month, but i'm seeing little difference, and I feel that this 6.9% for life would be far better than the current 3 rates i'm paying.

Any advice?

Edit: i'm also looking at getting a mortgage in the next 2/3 months when i see a flat i like the look of. Considering a 25yr 125% one from Northern Rock for a flat of around £60k, giving me £15k to pay off these cards, is this a good idea-i'd be making overpayments as a matter of course, but then the interest would be lower too...(i've also got two overdrafts totalling just under £2k, but they seem to be reducing steadily)

Emmzi

Grex,

before you put card payments on the mortgage - what has changed in your spending patterns so you know you won't run up the cards again? There's a danger you'll get yourself in an even worse position.

I can't see how you can move money about if you can't get a 'mule' card.. have you tried just ringing the companies, saying you're looking for a better deal, and what's their best rate they can offer? Might be worth a haggle.

Emmzi

Chortle_2

I'm with Emmzi - be VERY careful before you add your unsecured debt to your mortgage.

1) With a mortgage of 125%, you're instantly in negative equity - not a good thing. Especially if house prices drop.

2) Have worked out how much £15k will cost you in interest over 25 years? OK, so the rate might be lower than your CCs, but as it is over a longer term, you'll have compound interest working against you from the very start. Yes, overpaying will help negate this, but it'll still end up costing you more.

3) Unless you tie yourself into a fixed rate (and suffer redemption fees if you want to move during that time) mortgage rates fluctuate. Recently, they have been going up, not down.

4) Unless you are very strict with yourself, there is the distinct possibility that not only will you owe an additional £15k on your mortgage, you'll spend on the cards again and end up with £15k on your mortgage, and potentially another £15k on cards. Doubling your current debt. It is easier to do than most people think, especially when you've just bought a home, and want to 'do it up' and/or furnish it. (I've done it myself, minus the adding it onto a mortgage bit)

It isn't that adding debt to a mortgage is a bad idea for everyone, in some circumstances, it CAN work, but you do have to crunch the numbers accurately before hand, and you do have to be very sure that your spending is now fully under control. Its an easy way to clear debt, but also a very dangerous one.

As for your cards, obviously 6.9% would be a better option. Have you tried ringing Barclaycard and asking if they will up your credit limit, to enable you to take advantage of their BT offer? Its got to be at least worth a try.

Snowballing with £300 probably won't feel like you are making much of a difference to begin with, but it will eventually get you there. It takes a while for it to make a real impact, but it DOES work. You just need to keep faith.

If you do buy this flat, it will only help your credit rating, (being a homeowner, and obviously being on the electoral roll will improve it dramatically) and then you will find that you'll be able to take advantage of 0% and low LOB deals - which will make a huge difference to snowballing.

CLAPTON

perhaps you should consider posting your SoA on here so people can assist in helping reduce your spending....without the full details its not possible to say whether its sensible or even feasible.
Have you considered the costs of buying a flat...furnishing it, council tax, elect, gas, water etc plus of course solitors fees , survey, mortgage fees etc? how will you fund these costs?

silverelephant

Have you checked you are snowballing correctly? Enter your details to this calculator saying you have £300 to use each month and it will tell you the best way to break your £300 down to get rid of your debt the quickest.
http://uk.whatsthecost.com/snowball.aspx

You could also ask to up your limit on the barclaycard to take advantage of the low BT rate but remember any payments you make to that will go towards the lowest % rate debt first so you will still be paying 17.9% for the existing 7200 but not paying anything towards it.

I hope that makes sense lol

grex9101

All excellent advice, and it's really appreciated.
As for a SoA, i don't really have much to post as i'm in a bit of turmoil just now so it won't stay accurate for too long.

In terms of furnishing the flat etc, that's all under control as I have enough to get by on in storage, including all of the essentials.

My main concern really is trying to get all my cc debt on to the barclaycard at 6.9%. Would it be realistic (or even possible!) to call first direct and the co op and ask them both for a credit limit rise of approx £4k, do a BT to them both from the barclaycard, and then do it back again? (i realise that both co op and FD will charge me a %BT fee, but this will probably be negligible in the long run)

thanks again!