New to the forum - New to being in debt.

Anne1234_2

Hi there,

I have a quick question, not sure if it belongs here, ive never had credt cards etc before, but took one out along with a current acc with o/draft facility whilst at university. this was only meant to be used for emergenices and to enable me to buy things online (with the credit card).however during my studies i had to pay out 600 for a medical bill & after studying (thanks to the recession) I couldnt find a job so ended up using my credit card to live on due to a weird JSA loophole which meant i couldnt claim for a few months after uni. first prob is i assumed my acc was a graduate account, which in my T&C's states that this rate is applicable for 2 yrs after graduation (i graudated june 2009) but checking my account today it is telling me it ends on 17/07/10.. so now im really worried. Are they even allowed to alter my agreement withot notifying me?
I make the min payments(on my credit card) every month & have never missed a payment. now i want to work out how much i'll be paying as a minimum on ny new rate (after 17/07/10 ) which will be 18.25% of my bal which is £700, (on my overdraft) and of £500 on my credit card which is on the same rate i believe. im no good at calculations so ..... could somebody help me out with this? and maybe give me some advice? ive thought about possibly taking out a loan, but I am currently working so im thinking i could start to make quite big payments over the next few months so maybe just sticking with what ive got at the mo would be the best thing .. plus the whole concept of a loan is scary for me. (my acc is with hsbc by the way)

Thanks in advance

La_escocesa

Hi,

Welcome to the forum. :wave: Is it the interest rate that will be going up to 18.25%, and not the minimum payment amount?

If you know roughly how much you're going to be able to pay off each month you could use this snowball calculator to see how quickly you could pay it off: http://www.whatsthecost.com/snowball.aspx

So if you could pay £200 a month on £1200 debt at 18.25% it would take 7 months to pay it off.

It also might be worth ringing the bank to see if they've got the dates right/can keep you on the graduate account for another year. I know when I took out a student account they cancelled it in my 2nd year without telling me and when I called them up they re-instated it straight away, telling me it was a precaution because so many people dropped out after 1st year (so only those who were still students would call up to query it).

HTH.

Snowy_Owl

Hi, I would get in touch with the bank forst and ask them to go through the changes step by step and ask them to help you work out payments could be . Then take it from there........

Snowy

bexster1975

Hi Anne

I think you will find with the cc that they can't increase the interest rate on your existing debt, but it can be enforced on any new debt you accrue after the rate change - so don't use it!! It is called "rate-jacking" and it is happening a lot at the moment - Martin has written some stuff on it so search MSE site to find out more. As for the overdraft, I would definitely call the bank as suggested, but if they are unwilling to extend it, it will be up to you to negotiate longer terms (even if you can only have a £500 interest free overdraft for another 6 months beyond July). If you can save some cash over the next 4 months and pay off as much as possible from both. I would probably do overdraft first, any outstanding balance on the credit card you could transfer to 0% (just watch the fee for transfer as you only have a small balance and you don't want it to cost more to transfer than you would have paid in interest).

Best of luck, if you can really throw some cash at it, you might clear the lot in 4 months! You are in the best place for advice on how to live frugally in the meantime..

DarkConvict

I believe if the rate increases it does affect existing debt. Do check the rate jacking guide to prevent it. By the way minimum payments means it will take usually like 20-40 years to pay of the balance on a CC.
As to the overdraft, graduate account or not, overdrafts are payable given 30 days notice by the bank (and they do ask for it sometimes). These are just some facts you might want to be aware of.