Credit Card Debt - Please help!

JacktheLad_3

Hi,

I realise there are a lot of people on here who are worse off than myself, but I am hardly sleeping due to credit card debt and need some advice, please.

I have three credit cards:

1. HSBC - £630 AT 18.9%

2. MBNA - £2303 interest free until November 2010, then 19.9%

3. EGG - £1917 interest free until May 2011, then 21.9%

I am currently paying the minimum payment on each as I can't afford anymore. However, I am due to start a new job in October, so by then my financial situation will be a lot better and my incoming and outgoings will be like this:

MONTHLY INCOMING (after all deductions): £2191.08

MONTHLY OUTGOING (inc. min payments on the above): £1471

MONTHLY SURPLUS: £720.08

Please can you advise the most efficient way of paying over my debts ASAP, based on the above information?

Thanks very much in advance.

Jack.

dancingfairy

I think I would target the HSBC card and pay the minimum on the other 2 to start with as once shot of it (it's a relatively small balance) you will have one less card to manage and then you can phone them up and see if they will offer you any balance transfer deals - you may then be able to transfer one of the other debts onto it at a low rate if you're lucky.
There is a snowball calculator somewhere which will tell you the most efficient way to pay them off.
Good Luck
df

happycamel_2

Hi, you're accruing interest on the HSBC debt now so start there first and pay it off as soon as you can. Looks like you'll have that nailed in the first month.

Then clear MBNA @ £720 a month will clear in 3 months. That means you can pay off Egg before it comes out of interest free.

BUT, you need to make sure these debts to get any bigger in the mean time. If you post an SOA on here we might be able to help you find some cash to pay off the HSBC one sooner and the plan above depends on you spending all your spare cash on debt repayment and not getting tempted to buy other stuff.

To help you sleep better could you set yourself a challenge of paying a bit extra off every week even before you start your own job. Say make own lunch - save £20 - pay off £20 at end of week. Then you'll know you're already getting things under control.

Good luck

JacktheLad_3

Thanks for the reply. I never thought about asking HSBC for a balance transfer - good idea!

Thans for your help.

JacktheLad_3

happycamel wrote: »

Hi, you're accruing interest on the HSBC debt now so start there first and pay it off as soon as you can. Looks like you'll have that nailed in the first month.

Then clear MBNA @ £720 a month will clear in 3 months. That means you can pay off Egg before it comes out of interest free.

BUT, you need to make sure these debts to get any bigger in the mean time. If you post an SOA on here we might be able to help you find some cash to pay off the HSBC one sooner and the plan above depends on you spending all your spare cash on debt repayment and not getting tempted to buy other stuff.

To help you sleep better could you set yourself a challenge of paying a bit extra off every week even before you start your own job. Say make own lunch - save £20 - pay off £20 at end of week. Then you'll know you're already getting things under control.

Good luck

Thanks for that. I've just done a SOA, but managed to delete it. Anyway, my monthly outgoings are the bare minimum at the moment. I've recently got new, cheaper deals on gas & electric, sky, broadband and mobile etc in an effort to save money. I don't drink or go out hardly, so I don't want to lose my sky and I need my broadband and mobile for work.

Good idea about chipping away at the HSBC card. I will do that, although I can't pay too much until October as I am in my (interest free) overdraft.

Thanks for your help.

spursfan14

Have you considered shiftin all of your cc debts over to a zero % CC? Then you can concentrate on paying back the money that you owe. Or perhaps a consolidation loan? There are some good deals on APR (around 10% if your credit rating is good)

JacktheLad_3

spursfan14 wrote: »

Have you considered shiftin all of your cc debts over to a zero % CC? Then you can concentrate on paying back the money that you owe. Or perhaps a consolidation loan? There are some good deals on APR (around 10% if your credit rating is good)

I tried at the beginning of the week to do that, but i got rejected for both a new 0% cc and a lower rate loan. Having since looked at my credit file, it seems it's because I am only a couple of hundred pounds shy of my maximum lending amount, so a further loan or credit card isn't an option.

On a related point; I must've made about 6-10 applications for loans and credit cards this week before I checked my credit file and was rejected from all because of the above. How damaging will this be for future lending, i.e. mortgage/car credit etc? I always pay at least the minimum payment on any credit card and have never missed any payments or had a ccj etc.

Lucifa73

Personally I wouldn't consider consolidating into a loan - with the surplus you are predicting, even if you only put 500 a month to the debts and cut yourself a bit of slack you can be debt free in just under a year. If you put the full 720 to the debts and the amounts used for minimum payments it'd take about 8 months.

Take out a loan and the minimum term will be a year but more likely 3. Also consolidating may mean you don't learn lessons about managing your money and you could end up with more debt.

www.makesenseofcards.com/snowcalc is where you can look at different options and see the time scale involved

JacktheLad_3

Lucifa73 wrote: »

Personally I wouldn't consider consolidating into a loan - with the surplus you are predicting, even if you only put 500 a month to the debts and cut yourself a bit of slack you can be debt free in just under a year. If you put the full 720 to the debts and the amounts used for minimum payments it'd take about 8 months.

Take out a loan and the minimum term will be a year but more likely 3. Also consolidating may mean you don't learn lessons about managing your money and you could end up with more debt.

Thanks, and I think you're right, but like I say it isn't an option according to my credit file.

Can somebody please tell me how those applications will affect my applications for mortgages/car credit in the next 18 months or so?

dancingfairy

There is no really easy straightforward answer - I think it is recommended to do no more than 3 applications for credit per 6 months - so stop applying for more credit.
It depends on a) how much you want to borrow for the car/remortgage b) your earnings c) how much your debts are standing at d) whether you are on the electoral register e) whether you have missed any payments on any credit before f) your address history - how long you've lived at your address g) whether you're on the electoral role h) whether you are the type of person they are looking to lend to - ie whether they think they can make some money out of you but not for you to completely default!
There is an article on credit rating on here by Martin.
df
Edit: see here: http://www.moneysavingexpert.com/loans/credit-rating-credit-score#improve

JacktheLad_3

Thanks again.

I will be debt-free by the time I apply and I have a good credit history and a stable address. I'm just worried about all the applications I made this week affecting me in the future. Sounds like I should be okay if I don't make any more applications, which I won't (he says, optimistically....:D).