Advice needed to help clear credit card and overdraft please.

Nursery30

Hi

I'm just looking for some advice. After being made redundant i've run up a debt of £1500 on a virgin c/card and £1000 on an overdraft, i'm wondering if anyone out there can give me some advice of the best way to start clearing it, i've repaid over £500 off the c/card but the 0% interest free period has now ended, the same with the overdraft, I can reallistically pay off about £100 per month as i'm now in a very low paid job, i'm not very good with financial terms and would like to stop this before it escalates me further into debt so any advice is gratefully received.

Many thanks

michael1983l

Nursery30 wrote: »

Hi

I'm just looking for some advice. After being made redundant i've run up a debt of £1500 on a virgin c/card and £1000 on an overdraft, i'm wondering if anyone out there can give me some advice of the best way to start clearing it, i've repaid over £500 off the c/card but the 0% interest free period has now ended, the same with the overdraft, I can reallistically pay off about £100 per month as i'm now in a very low paid job, i'm not very good with financial terms and would like to stop this before it escalates me further into debt so any advice is gratefully received.

Many thanks

I advise a good look at the debt free wannabe board.

However if I was in your position I would start with approaching the lenders, explaining your circumstances and try to negotiate with them a lower interest rate and a set repayment structure. Most lenders will do this if you are in fact in financial hardship. If you can afford to pay back more than you are telling us then it is unlikely they will do a deal with you.

stephane_2

probably best to re-apply for another 0% credit card on balance transfer...

michael1983l

How is taking more credit ever a good way to get out of debt? and besides, if they cannot afford to pay their current borrowings, it is highly unlikely they will get accepted for more.

stephane_2

michael1983l wrote: »

How is taking more credit ever a good way to get out of debt? and besides, if they cannot afford to pay their current borrowings, it is highly unlikely they will get accepted for more.

Maybe you should read the his/her post more carefully before judging mine....the level of debt is relatively low, he/she has a job but with a lower wage but can still afford to repay £100 per months, it's not a question of getting more debt, it is the best way possible to get out of debt as cheaply as possible. Your option to contact lenders should be her very last option, nothing to loose to try to apply for another 0% credit card.....

michael1983l

stephane wrote: »

Maybe you should read the his/her post more carefully before judging mine....the level of debt is relatively low, he/she has a job but with a lower wage but can still afford to repay £100 per months, it's not a question of getting more debt, it is the best way possible to get out of debt as cheaply as possible. Your option to contact lenders should be her very last option, nothing to loose to try to apply for another 0% credit card.....

£100 per month will take 3 to 4 years to clear £1500 on a CC and £1000 on the O/D and if the OP genuinely only has £100 disposable income then they are likely to reuse their credit at some time. Therefore based on the information the OP provided I would think that taking more credit, even if it is available is a bad idea is it is likely to be used and the OP end up in further debt.

From what the OP has said it sounds like the OP has a very tight budget and in all honesty £100 a month is not enough to service the debt they have, they should be paying more as the interest incurred on the overdraft alone will cancel out 20-30% of payments made assuming that they pay £50 and the debit interest rate is standard 19.9%

YorkshireBoy

£100 on a £2K debt is 5%. Most lenders ask for up to 3% so your £100 budget will adequately service the debt.

In your situation (because you need 0% funds into your current account) I'd try an application for the Egg Card (that's Visa, NOT Egg Money, when you go to their website).

And to michael1983l, there are 3 ways to get out of debt:

1. Earn more
2. Spend less
3. Restructure the debt

Option 3 is being discussed here.

michael1983l

YorkshireBoy wrote: »

£100 on a £2K debt is 5%. Most lenders as for up to 3% so your £100 budget will adequately service the debt.

In your situation (because you need 0% funds into your current account) I'd try an application for the Egg Card (that's Visa, NOT Egg Money, when you go to their website).

And to michael1983l, there are 3 ways to get out of debt:

1. Earn more
2. Spend less
3. Restructure the debt

Option 3 is being discussed here.

I take it you missed the part where I said "if I was in your position I would"

YorkshireBoy

michael1983l wrote: »

£100 per month will take 3 to 4 years to clear £1500 on a CC

OP now has only a £1K debt on the credit card, having run up £1,500 and repaid £500...if I've read it correctly.

In 13 months (on the Egg Card I've suggested above) he'll have repaid £1,300 and be left with a £700 overdraft only.

Not the end of the world as you make out...is it?

michael1983l

YorkshireBoy wrote: »

OP now has only a £1K debt on the credit card, having run up £1,500 and repaid £500...if I've read it correctly.

In 13 months (on the Egg Card I've suggested above) he'll have repaid £1,300 and be left with a £700 overdraft only.

Not the end of the world as you make out...is it?

13 x payments of £50 for CC = £650 paid off a £1500 balance

O/D = £650 off a balance of £1000. plus interest will probably be closer to £500 paid off with interest.

The OP would still owe £1350 by my maths.

This is all assuming the OP does not respend any of their available credit, this is not being judgemental however with the way living costs are rising I would not think it would be long before the OP has less than £100 to pay their debts.

If the OP has money aside that is disposable that isn't being used to service their debts then this whole account changes. However I would suggest the OP uses all their spare cash to pay their debts.

stephane_2

michael1983l wrote: »

I take it you missed the part where I said "if I was in your position I would"

So if you suggest that he/she contact lender to reduce interest what is your argument for not trying to take a credit card with a 0% offer and has Yorshireboy suggested the debt would be repaid quite smoothly over time without having anything damaging on his credit report....contacting lenders should be last resort as many will refuse if account is not defaulted and many try to increase further interest as a result....