Help! What to do with my credit card debt?

chris10131121

Hi everybody,

I’m new around these parts so I hope it’s OK to ask for some advice on this forum!

I am struggling with some credit card debt and so thought it would be handy to get some tips. I find it hard to understand comparing interest rates/APRs, and have looked a bit round this site and others but it may make more sense if I spell everything out here for you guys to make some suggestions.

I have two cards, one is an HSBC Mastercard with £2050 debt. The credit limit is £5500 and the statement says the APR is 21.9%. The statement says the interest on cash is 2.004% and the interest on purchases is 1.671%.

The other is a Virgin Mastercard with £3722 debt. The credit limit is £5000 and the statement says the interest is 1.24% on purchases and balance transfers. Annoyingly I can’t find anything about APR on the statement.

I always pay the minimum payments on the card but that tends to be about the same as the interest anyway.

I lost my job in September, luckily I got a new one quite quickly but unfortunately with a lower salary – so I can only ever afford to pay about an extra £100 to the cards on top of the minimum payment, before getting close to my overdraft.
I have tried applying for a new 0% balance transfer card twice but have been declined – I’m worried about applying for more in case I damage my credit rating permanently. I’ve checked my credit rating with the 3 different agencies, and it doesn’t seem to have any major problems, but I guess I may have a bad credit score because I have moved house a few times in the last few years and have changed credit card a couple of times too. I also have a monthly direct debit of about £40 for a new laptop I had to buy last year when my old one died in the middle of applying for new jobs!

What would you guys recommend?

Should I move some of the debt from one card to the other? Should I try and get some kind of loan to pay off both cards?

Any help would be really useful, as I seem to be getting nowhere, and if I carry on like this it will take decades to pay them off!

Thanks!

Tixy

Hi and welcome, its always okay to ask for advice on here!

Sounds like you need to do a review of your finances and perhaps post a statement of affairs on here so you can get some tips on your current situation (http://www.makesenseofcards.com/soacalc.html)

You are right not to continue making credit applications - I assume you are on the electoral roll at your current address? Did any of the lenders give a reason as to why specifically you were refused?

The rate on the virgin card is obviously lower than the hsbc, (it will be roughly 15-16%) apr (approx 12.5 x the monthly figure) but once you build in transfer fees it could negate any cost saving.

A consolidation loan can cost more in the long run as although the APR can be low they are often taken out over a long period of time. They also don't really address the cause of the debt (overspending more than you have incoming).

Hope this helps and setting out a detailed SOA would be my suggestion for the next step.

Good luck

Virus_2

Hi Chris,

If you have just used your Virgin card for purchases, the yearly interest rate is 15.9%. My advice would be to transfer as much of your HSBC card balance to your Virgin card and concentrate any overpayments on the HSBC card to clear it completely.

Just watch that Virgin don't increase the interest rate, they should send you a letter if they decide to do this though.

Once the HSBC card is clear, use it for purchases that normally go on your debit card but pay it off in full each month so you don't get charged interest... Doing this might help your chances of getting a 0% card in the future, but I'd leave it at least 3 months before trying again.

Someone else may have better advice but hope that helps!

chris10131121

Thanks guys, I will get on the case with the SoA (sorry didn't read that before posting).

Any more tips would be very very welcome

LeeSouthEast

No tips yet (that'll really begin when you post your SOA for us to pick over), but I just wanted to say welcome, and you're in the best place on the interwebs for help.

chris10131121

Hope I did this properly! I wasn't sure what the Annual % for the Virgin card was so I estimated 16% based on Tixy's post above...

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 0
Monthly Income Details
Monthly income after tax................ 1368
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1368
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 590
Management charge (leasehold property).. 0
Council tax............................. 50
Electricity............................. 25
Gas..................................... 20
Oil..................................... 0
Water rates............................. 20
Telephone (land line)................... 0
Mobile phone............................ 30
TV Licence.............................. 9
Satellite/Cable TV...................... 0
Internet Services....................... 8
Groceries etc. ......................... 70
Clothing................................ 20
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 25
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 15
Haircuts................................ 10
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 0
Laptop.................................. 40
Total monthly expenses.................. 1032

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
HSBC card......................2051......51........21.9
Virgin.........................3722......54........16
Total unsecured debts..........5773......105.......-

Monthly Budget Summary
Total monthly income.................... 1,368
Expenses (including HP & secured debts). 1,032
Available for debt repayments........... 336
Monthly UNsecured debt repayments....... 105
Amount left after debt repayments....... 231
Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -5,773
Net Assets.............................. -5,773

Virus_2

Hi Chris,

Can any savings be made on entertainment/clothes/food? £100 a month on entertainment seems a lot (But I am getting on a bit now! ).

Is there anything you can sell on ebay? CD's/DVD's/books etc. can be sold on Magpie Music if you have any you don't really need any more?

Welshdebtor

chris10131121 wrote: »

Hope I did this properly! I wasn't sure what the Annual % for the Virgin card was so I estimated 16% based on Tixy's post above...

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 0
Monthly Income Details
Monthly income after tax................ 1368
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1368
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 590
Management charge (leasehold property).. 0
Council tax............................. 50
Electricity............................. 25
Gas..................................... 20
Oil..................................... 0
Water rates............................. 20
Telephone (land line)................... 0
Mobile phone............................ 30
TV Licence.............................. 9
Satellite/Cable TV...................... 0
Internet Services....................... 8 wow that's low lol
Groceries etc. ......................... 70
Clothing................................ 20......do you spend £20 every month?
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 25
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 15
Haircuts................................ 10
Entertainment........................... 100....Could this be lower?
Holiday................................. 0
Emergency fund.......................... 0
Laptop.................................. 40Whats this???
Total monthly expenses.................. 1032

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
HSBC card......................2051......51........21.9
Virgin.........................3722......54........16
Total unsecured debts..........5773......105.......-

Monthly Budget Summary
Total monthly income.................... 1,368
Expenses (including HP & secured debts). 1,032
Available for debt repayments........... 336
Monthly UNsecured debt repayments....... 105
Amount left after debt repayments....... 231
Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -5,773
Net Assets.............................. -5,773

Fairly good SOA of a single person, just a few questions as highlighted.

chris10131121

I've tried Ebay in the past but don't have much of high value, so tend only to make the occasional £1! I also work in central London and live quite close to the centre, so everything costs more (sorry, promise I'm not making excuses!).

However, I don't make any new purchases on the credit cards, so I think my main focus has to clear those debts.

chris10131121

Hi Welsh,

I share a house with 2 others, so we split the bills for internet etc.

The laptop cost is a monthly repayment for a laptop I bought last year, when mine sadly stopped working!

I am trying to cut the entertainment costs, £100 is probably the max I ever spend. I guess I need to be less naughtly and stay in more! I would say I average about £20 month on clothes, sometimes it's nothing, sometimes it's more.

Welshdebtor

Tightening the belt in one area i.e entertainment will give you more money to pay off those cards.

So is the laptop via a friend or someone??? i.e not through debt/credit