Credit Cards vs Consolidation Loan Advice

taste3171

New to the forum folks and I just wanted to sanity check my current thinking.

I have £14500 worth of credit card debt spread over 4 cards all with high apr.

On previous visits to the site the preferred wisdom in the articles on the subject appeared to be to avoid consolidation loans and rather pick them off one by one and then try and benefit from balance transfer deals that the clear card offers, moving the debt until clear.

This made sense and I embarked on said strategy with the best of intentions. Frustratingly I am a tad stuck in minimum repayment limbo. I never do have the spare cash to tackle the card with the highest rate and I am getting nowhere. ( a common challenge I'm sure and a point I note that is never really tackled by these articles ) This is also not doing my credit rating any good. I am currently paying £321 per month to service this debt.

I bank with Lloyds and received a call from my branch today offering me a consolidation loan of £15000 at 9.5 % over 5 years ( £ 312 pm ) and I am really tempted. I know there are supermarket loans out there for a little less but I am unsure whether I will satisfy lending criteria where as my bank have all but agreed. I also note that some of the low apr cards like the Halifax have a really good apr with no balance transfer fees but I doubt I will a) be approved and b) secure a £14500 credit limit. Lloyds have assured that overpayments on the loan are possible at any time.

Given my inability to make a dent on the debt and in these circumstances is the consolidation loan not the best strategy or am I missing something here?

Advice most welcome.

Kind regards .... David

Cash_Flow

taste3171 wrote: »

New to the forum folks and I just wanted to sanity check my current thinking.

I have £14500 worth of credit card debt spread over 4 cards all with high apr.

On previous visits to the site the preferred wisdom in the articles on the subject appeared to be to avoid consolidation loans and rather pick them off one by one and then try and benefit from balance transfer deals that the clear card offers, moving the debt until clear.

This made sense and I embarked on said strategy with the best of intentions. Frustratingly I am a tad stuck in minimum repayment limbo. I never do have the spare cash to tackle the card with the highest rate and I am getting nowhere. ( a common challenge I'm sure and a point I note that is never really tackled by these articles ) This is also not doing my credit rating any good. I am currently paying £321 per month to service this debt.

I bank with Lloyds and received a call from my branch today offering me a consolidation loan of £15000 at 9.5 % over 5 years ( £ 312 pm ) and I am really tempted. I know there are supermarket loans out there for a little less but I am unsure whether I will satisfy lending criteria where as my bank have all but agreed. I also note that some of the low apr cards like the Halifax have a really good apr with no balance transfer fees but I doubt I will a) be approved and b) secure a £14500 credit limit. Lloyds have assured that overpayments on the loan are possible at any time.

Given my inability to make a dent on the debt and in these circumstances is the consolidation loan not the best strategy or am I missing something here?

Advice most welcome.

Kind regards .... David

I say take the loan.

It will cost you Approx £4000 pounds in interest but it should ease your cash flow problems.

If you do take the loan, cut up your cards;)

CLAPTON

the reason that consolidation loans are not generally supported is that experience shows that many people go on to spend again on their credit cards and run up even more debt

you say you can bearly manage 312ppm so it looks like any 'emergency ' will see you spending again on the CCs

do you have a detailed budget?
http://www.makesenseofcards.com/soacalc.html

you really need to reduce your spending to free up more money and/or increase your income (part-time job etc) whether or not you take up the loan offer

taste3171

Point taken Clapton. Also your "emergency" scenario is something I have considered at length and remains a very serious challenge . Although, this is my bed as it were and I need to believe that I am determined enough to address.

I guess my strategy is to attempt to reduce the term and interest by overpayments as and when however infrequent. I have an annual bonus which though modest can in part be diverted. I do have quite a detailed budget and have finally seemed to have got into the habit of sticking to it. I am on performance related salary increases so also need to believe that my salary will improve over the 5 years, career advancement notwithstanding ;0)

I did investigate a remortgage but as I am with NRAM this will involve moving lenders and the equity in the property is insufficient to make it worthwhile.