Personal loan to cover cards and other loans??

PBJen

Hi all,

I've finally faced reality and started to tackle my debt. However, I'm not sure which is the best way to go about it, and I'm currently considering a personal loan to cover the debt. However, I know from reading this site and forum that this may not be the best solution...

My debt is:

• Barclay's Career Development Loan: £4,000 for 2 years @ 9.9%, repayments start in Nov
• Virgin credit card: £2,500 @ 0% until Dec, then 16.6%
• HSBC credit card: £1,636.49 @ 22.9%
• HSBC overdraft: £1,478.94 which seems to be almost interest free as I only get charged 39p/month interest, probably because I think this is still a graduate account, but I'm fairly certain they're going to catch on any day now, and would like to get it cleared and closed!

I currently pay £100 of the HSBC card each month, CDL repayments will be £196/month, and I shamefully have only been paying £25 off the Virgin card and nothing from the overdraft.

I'd like to clear the CDL before repayments begin, and want to close the HSBC account and at least one card (leaving one for absolute emergencies!)

I know people always suggest a 0% credit card, but I would never get a high enough limit, and I do think the only way I'm going to tackle all the debt is if I lump it all together. Plus I'm wary of going through too many credit checks; as far as I'm aware, however, I have a good credit rating.

I'm looking at a personal loan of £11k from either Sainsbury's (7.9%) or Tesco (8%) over 4 years (I realise I'm not guaranteed those rates). This would be a monthly payment of around £270, which I've calculated I should be able to manage (by the way, my monthly salary is only £20k...)

What does everyone think? If anyone can think of a better way for me to tackle this, I'm all ears!!

Much thanks in advance for your advice and comments.

rayz_nine

If the personal loans interest less than cards or other loans is better..

CLAPTON

pay off the debts with the highest APR first

so there is no point is paying off the CDL first when you are paying 22.9% on the CC.
do keep an eye on the oD however as banks don't like you always being too near your limit.


do you have a proper budget and do you know where all your money goes?

a good format is
http://www.makesenseofcards.com/soacalc.html

PBJen

I don't have a proper budget but I do have a decent idea of where all my money goes. I have definitely been cutting down and getting more sensible over the last few months, and I think if I could get my debt sorted out, it would help in getting my finances in general in order.

The OD is a weird one, as I don't use that current account anymore, so not much goes on in that account. My priority is to clear that (and close the account) and my cards.

If I were to pursue the personal loan to cover all the debt option, do you think I might have better luck going into a branch to speak to someone instead of applying online? I know that asking for an £11k loan would look like it was just going to be added to the nearly £10k debt I already have, but if I could speak to someone, could they be convinced that my intentions are good??

And if so, do you think I would have better luck with HSBC or Alliance & Leicester (who I currently have accounts with) or another bank?

If I don't go the personal loan route, do you think it might be an idea to seek out an interest-free CC to cover the OD and current CC, and deal with that apart from the CDL?

Also, when applying for any kind of loan or CC, or using CCCS (for eg) should I be declaring my student loan? I actually have a habit of forgetting about it, as it goes straight out of my wages, and so is already covered by the time I arrive at my take-home pay; but I guess it's still a form of debt??

(Sorry for the long response: I have so many questions, and feel like I need to properly sit down with someone to hash it out, but don't know who to go to for that.)

Thanks!

CLAPTON

You are unwise to have an OD on an account and not use it at all.
They (especially HSBC) and very likely to suddently recall it. Much better to pay something in each month even if you then spend it again a little later.


You haven't said what your salary is but I doubt that anyone will give you a 11k loan for the reasons you identified above.

Some of your options depend upon how much you can afford to pay off each month. e.g. 0% BT cards rarely last more than 12 months so it good to clear those before the promotional rate runs out.

In any event the CDL isn't a bad rate.

Better to apply for a smaller loan or 0% BT card and just accept that you will have to pay 2/3 different bills each months.

iolanthe07

by the way, my monthly salary is only £20k...)

I Presume you mean annual salary. TBH it will be hard to get a personal loan for more than 50% of your salary, but try your own bank first.