Removing the interest off my credit card repayment

albmoney

I have come to the realization that my credit rating is shot to pieces and will never be realistically repaired within the next 5 - 10 yrs.
I have 3 lots of debt left, 2 with Egg and 1 with the Co-Op.
The Egg card/loans have about 7 grand left but because I defaulted on the payments a while ago they are in recovery. This has led to me not paying any interest on the debt. I'm happy to pay that.

However, the co-op one is nuts. The cc never went into recovery, rather I had a string of late/missed payments until I finally got a job and started to pay regularly. By that time they had washed their hands with me and stopped the use of the card. Fine. I understood. I then went and had a blemish free 2 yrs of paying on time and got to 2 grand under the limit. I asked them whether they would re-instate the card (even in a limited fashion). They said no, and the would never consider that.

So I am paying the same interest rate, am well within the original agreed credit limit by a few grand but get nothing from them. I cant transfer the debt to 0% because of my credit rating. I realise also that the negative credit notice stays till up to 5 yrs after you have settled the debt. So if it takes me 3 yrs to pay them off, my credit rating will still be bad for up to 8yrs!

In light of the above information. Why the hell am I paying these people the interest? What is the downside of just letting the debt slide into recovery and then at least getting the interest chopped off the debt?
I cant see what they could possibly do to me worse than what's happened already.

I don't use credit/loans for anything any more and haven't for nearly 4 yrs. The only thing I want to do is buy a property and the more I look at it, if you throw down enough cash everyone turns a blind eye to your credit history. So that's fine with me. I no longer want to pay any of these institutions any more than I have to. They are just duplicitous, dishonest and deceitful in my eyes..

I'm about to go nuclear and tell them to jump.. am I crazy?

lisyloo

It's 6 years once the account is settled not 5.

the more I look at it, if you throw down enough cash everyone turns a blind eye to your credit history

I think you might be thinking of pre-credit crunch days where a blind eye was shown to "self-cert" mortgages.
All of that kind of stuff has been tightening up on now so I don't think you will find this to be the case post credit crunch.

euronorris

I think it may only be 5 years in Scotland, so it depends where the OP lives.

I agree, you won't get a mortgage with a shot credit rating, no matter how much you put down.

So, if this is a problem debt for you, best to throw ALL disposable cash at it until it's cleared. Sell stuff, reduce your outgoings, increase your income etc etc.

I don't know the interest rate, but... if you paid between 180-200 GBP off that card each month, it'd be gone in a year.

It might also be worth asking them to reduce the credit limit to just above the current balance. You're not able to use it anyway, but it'll be showing on your credit file as available, but unused credit.

ILW

albmoney wrote: »

I have come to the realization that my credit rating is shot to pieces and will never be realistically repaired within the next 5 - 10 yrs.
I have 3 lots of debt left, 2 with Egg and 1 with the Co-Op.
The Egg card/loans have about 7 grand left but because I defaulted on the payments a while ago they are in recovery. This has led to me not paying any interest on the debt. I'm happy to pay that.

However, the co-op one is nuts. The cc never went into recovery, rather I had a string of late/missed payments until I finally got a job and started to pay regularly. By that time they had washed their hands with me and stopped the use of the card. Fine. I understood. I then went and had a blemish free 2 yrs of paying on time and got to 2 grand under the limit. I asked them whether they would re-instate the card (even in a limited fashion). They said no, and the would never consider that.

So I am paying the same interest rate, am well within the original agreed credit limit by a few grand but get nothing from them. I cant transfer the debt to 0% because of my credit rating. I realise also that the negative credit notice stays till up to 5 yrs after you have settled the debt. So if it takes me 3 yrs to pay them off, my credit rating will still be bad for up to 8yrs!

In light of the above information. Why the hell am I paying these people the interest? What is the downside of just letting the debt slide into recovery and then at least getting the interest chopped off the debt?
I cant see what they could possibly do to me worse than what's happened already.

I don't use credit/loans for anything any more and haven't for nearly 4 yrs. The only thing I want to do is buy a property and the more I look at it, if you throw down enough cash everyone turns a blind eye to your credit history. So that's fine with me. I no longer want to pay any of these institutions any more than I have to. They are just duplicitous, dishonest and deceitful in my eyes..

I'm about to go nuclear and tell them to jump.. am I crazy?

The reason you are paying interest on the debt, is because that is the basis on which you borrowed the money.
If you treat debt this way you can forget ever getting a mortgage.

albmoney

Thanks for the responses.
I'm in the UK, so it must be 6 yrs then (whoppee!).

The UK is amazing, one bout of unemployment and your life is ruined for the next 15 years.. lovely! I earn even more than I did before I got made redundant, but according to the "system" I am less worthy..

Every time I pay £150, I'm paying about £75 in interest. I think the debt is about 5 grand now. If it had no interest I'd try to hammer it down, but I cant afford to end up paying an extra 5 grand above what I borrowed.

It seems to me that if a debt goes into recovery now. They would have to stop the interest part in order for me to be able to clear the debt. Therefore I would only pay back 5 grand rather than 10 and I would clear it faster, thus getting my credit rating back quicker.

Letting them keep my credit card "alive" is basically killing me! Is my calculation wrong?

albmoney

ILW wrote: »

The reason you are paying interest on the debt, is because that is the basis on which you borrowed the money.
If you treat debt this way you can forget ever getting a mortgage.

Mate, I've had a mortgage before.. I'm over the "euphoria" of allowing a company to use money they don't actually have to enslave me for the next 25 yrs! If I don't get a mortgage again, I wont cry.. But banks are greedy all the same.

There is no risk on their part if you put down 100 grand on a 250 grand property. Why on earth wouldn't they give you a mortgage? Even if you default their quids in because they get to keep your 100k as collateral. It's a no-brainer as far as banks are concerned.

lisyloo

one bout of unemployment and your life is ruined for the next 15 years

That's not entirely true.

It's not unemployement, it's not paying your debts as agreed that's the problem.

If you'd not taken on debt you weren't sure you could pay back, or had taken our reasonable precautions (like insurance) then you wouldn't be in this mess.
It's the lack of financial plannign not the event that's the problem.

I'm not saying that to be nasty, but if you don't learn from it you might just epeat the same mistakes.

Everyone makes mistakes, sure, but to blame someone else without reflecting objectively is not good.

Everyone knows that death, sickness, redundancy, accident, can happen to any of us.
That's what insurance is for.

albmoney

lisyloo wrote: »

That's not entirely true.

It's not unemployement, it's not paying your debts as agreed that's the problem.

If you'd not taken on debt you weren't sure you could pay back, or had taken our reasonable precautions (like insurance) then you wouldn't be in this mess.
It's the lack of financial plannign not the event that's the problem.

I'm not saying that to be nasty, but if you don't learn from it you might just epeat the same mistakes.

Everyone makes mistakes, sure, but to blame someone else without reflecting objectively is not good.

Everyone knows that death, sickness, redundancy, accident, can happen to any of us.
That's what insurance is for.

I'm not shirking my responsibilities. I readily accept that I signed all these agreements etc..
I do take issue with the fact that companies prey on people who don't understand the intricacies of these agreements. Look at the American sub prime crisis for evidence that these institutions are definitely not saints.

For example, did you know that you are only covered for a certain amount of debt when taking out debt insurance? So if you took out debt insurance on every hp/loan you had you will find out that when you lose your job, not all of the companies you've signed agreements with will pay out. They love to take your money every month but won't make you aware of that important fact!

The low interest rate policy of the last 10 yrs has inflated the cost of housing so much that it means that everyone needs to get credit unless they have a really high paying job. I don't think the systems fair.. you may think so, that is your prerogative.

But to eternally exclude people from this "system" for mistakes they made in 1 yr when they were young and "inexperienced" is definitely not a good thing for society. Remember, life is not as clear as your personal copy of Daily Mail portrays it to be...

ILW

Whats all this young and inexperienced excuse. OK if you took on the debt a 10 years old I could sympathise, if you were over 18, sorry you should have been old enough to know what you were getting into.

albmoney

ILW wrote: »

Whats all this young and inexperienced excuse. OK if you took on the debt a 10 years old I could sympathise, if you were over 18, sorry you should have been old enough to know what you were getting into.

It always makes me smile when I hear comments like that.
I bet your the first to complain that the goverment should protect you in say.. the ICE bank scandal, or the new BP Pension issue..

When the shoe is on the other foot all this "you should have known" crap goes out the window!

If it's Caveat Emptor.. then let it be for EVERYONE.

Fiddlestick

albmoney wrote: »

For example, did you know that you are only covered for a certain amount of debt when taking out debt insurance? So if you took out debt insurance on every hp/loan you had you will find out that when you lose your job, not all of the companies you've signed agreements with will pay out. They love to take your money every month but won't make you aware of that important fact!

Sorry to be blunt but banks DO tell you the major exclusions and DO tell you to read the terms and conditions for the full details.

You know, that's the terms and conditions that YOU sign and that YOU are ultimately responsible for reading?

If you aren't happy with the terms and conditions then don't sign them.