Reducing fees paid on debt

rosepetal_2

Hello, I'm hoping you can help.

We currently have 1 current account in use and 1 credit card, both with Lloyd's TSB. We have never had any other credit cards. I have 1 store card that has not been used in years (but as yet I've not bothered cancelling it), and I had 1 other store card that was cancelled by the store the other year, as I had not used it in years.

Due to our circumstances (decreased income not wanton overspending) the account is regularly/always overdrawn every month. The limit we have is £750 and every month we yo-yo between only just being in credit to sadly reaching it too often.

The credit card currently stands at £700 (this is the highest it has even been. It has a £4000 limit which I never want to contemplate nearing as I cannot afford that amount of debt).

We are currently unemployed but a recent credit check/score report has shown top marks - no unpaid/ignored debts etc.

We rent and have no other debts of any kind. We currently have no income other than benefits.

Previous to now I hadn't been considerably concerned at our level of debt - of course I would much prefer to be in credit but having ensured all our outgoings were lowered as much as we can reasonably achieve I did not feel we were spending more on a regular basis than we had coming in.

Much of our debt was made up some years ago by having to move house a couple of times. The associated costs - moving vans, estate agent fees and deposits added up, and we did not make as much of a dent in repaying the debt as I had hoped we would (other costs came along the way).

The reason I am now concerned is that we are getting married in the near future, and are looking at up to £1k of costs which we mainly expect to end up on the credit card.

I have also read on MSE that Lloyd's are going to be charging an additional £5 fee each month from December on agreed overdrafts.

Other than lowering our out goings and upping our income, is there anything else I can do to address this situation. Is there any possibility of changing our banking situation (getting a new interest free credit card or similar) with no job - I'm guessing not even though we have a good credit record.

Please do not feel the need to tell me to get a job - I am actively seeking work. Please do not tell me to cancel or cut back the cost of our wedding. We have waited many years and £1K is as reasonable a cost as we are willing and able to cut back to as we have already been offered extra financial help by relatives towards our wedding to reduce the costs as we have waited so long to get married and have already compromised many other things such as having a honeymoon.

If those are the only solutions then obviously we will incur the fees and keep making repayments to the maximum we can afford each month (I have never made a minimum payment thus far in my life)! If we receive any wedding gifts we hope they will be towards the wedding costs!

I understand that to may people £1.5 to £2.5k (potential) is not a huge level of debt, but when you have a tiny income, comparatively it is huge.

Thank you for reading.

bottleofred

Hi Rosepetal,

You could apply for an interest free credit card as some have up to 15 months at 0% at the moment. However, as you currently are unemployed I'm not sure what way the credit card companies will look at this. Another thing to consider is even if you are successful and get a 0% card and then put the cost of the wedding on it, will you be able to pay the £1000 back in 15 months?! As the minimum monthly payment to do this would be around £70. If not, the interest rate would then be around 16% and the amount of interest you would pay would depend on the amount you could afford to pay each month.

Good luck with whatever you decide

josephine82

Hi rosepetal
My first piece of advice would be to change your bank account. If you get a new bank account, switch all your direct debits etc to the new account, and then set up a standing order (however small) to pay off the overdraft. This was you will 'see' all of your money and you will be making regular payments to clear it and it will help you know how much cash you actually have left.

As for the credit card- I don't think there is much you can do in terms of a new card, considering you are not in employment. I would keep plugging away at the credit card debt paying as much as you can.

As for the wedding, well, its your choice, you just need to make sure you have a plan in place for how you are going to pay it back- especially I guess if you don't manage to find a job.

Good luck!

katsu

Rosepetal.

I feel for you - how much you want to be married.

Have you worked out how much you can afford to repay each month? Unfortunately the cost of your wedding is not £1k. It is £1k plus the interest (minus your payments obvuiously) for all the time it will take you to clear this. I suggest you use the snowball calculator (I think you can find a link to it on a sticky?) to help you work out how long this will take to clear.

You can look at the "up your income" boards, but the only other advice we can give you willl be to cut back on your wedding expenditure or your day to day spending - for that you can post an SOA for advice.

Please be careful about getting into debt with your wedding - I can empathise as there were bits of our wedding that went onto the CC and added to the debts there to be paid off over time. Just keep it manageable.

I hope you have a lovely day.