extending loan to pay off credit card?

bekc

Hello,
I am hoping this is in the right section but if it is wrong I apologise!

I'm after a bit of advice please!
I am in my late twenties and live with my partner in a rented house in south wales.

I have a loan of £5000 at 13% with Santander (originally and Abbey loan) for my car. I am paying £167.05 pcm for three years and am currently 18 months through the loan term. This was my first ever loan! This was not a problem when I orginally took the loan out and I could afford the repayments and my normal life comfortably.

The problem I have is, due to my partner being out of work since may last year (My partner is trying to get a job - Bless him), my already laden credit card (that I was in the process of paying off and had been for 18 months!) has now become 3 maxed ones.

I have a tesco card (which I used to just use for buying the shopping and petrol and paid off every month comfortably. This is now maxed at £1400 with a 16.9% interest rate.
I have a Halifax card that has £1300 on it which is currently 0% interest until august 2010 due to a balance transfer offer last year (limit £1500).
And finally the biggy - I have an Egg card which has £4500 on it. I moved other cards onto the egg card as the interest rate was cheaper and I worked out that I could save money. Then last week I had an email saying that the interest on this card was going up from 16% to 26%. I was incredibly upset.

The repayments are now crippling me and with this increase to my egg interest I will not be able to keep this card below its credit limit for more than 2 months.

I have just worked out that I am paying out around £350 a month on credit cards on top of the £167.05 for my loan. This is taking a massive chunk out of my wages and then I have to use the credit cards to live..... It's a nightmare.

What I am wondering is:
Would the best thing to do to try and ease this pressure be to try and get my loan extended to cover the credit cards?

This would mean a set amount going out a month that I know I can afford.
I know this would may my loan term longer, but I am hoping my partner will get a job soon and we can either pay it off early or save the money (I will look into the best thing to do when we get to that point cause at the moment I just want to be able to live again!)

Has anyone out there done this before and is there a best way to go about it?

Many many thanks for your time,

Bekc

jennihen

I think you have to look at the worst case scenario that you cannot extend your loan due to having a high amount of outstanding credit.
Consolidation isn't usually recommended as its not a long-term solution.
You would be better advised to post a full SOA on the debtfree wannabe board and look at ways of upping your income, reducing your outgoings and throwing as much cash as possible at the highest interest credit cards.
It may not be the advice you wanted to hear but even if your bank did increase the amount and term of your loan, you'll be in debt longer, you'll pay more interest and there is no guarantee that you'll be in any better position in, say, 5 years time.

katsu

I believe you can contact egg and reject the rate rise as long as you agree to effectively close the card. You spend no more money on it and just pay it off over time (you don't need to pay in one go or anything). Have a look on the credit card tab on the main site bar above - see what it says?

bekc

Hi both,
Thanks for your replies.
I am going to call Egg tomorrow night after work and follow the guide suggested @ http://www.moneysavingexpert.com/reclaim/credit-card-interest-rate-increases to try and stop Egg increasing my rate by closing the card.
Wish me luck!