Should I get a loan to pay off existing credit card debt?

mrsmoose

Hi everyone!

I'm hoping you can help me, as I'm sitting in a bit of a position. My husband and I have amassed around £12,000 worth of credit card debt between us (yes, it's extremely bad I know!!) and I desperately want to pay it off as soon as possible in the smartest possible way. Currently the situation is as follows:

My credit card: £4,900 outstanding (14.9% APR)
His credit card: £4,500 outstanding (18.9% APR)
Joint credit card: £2,500 outstanding (16% APR)

Currently £200 a month is paid towards each of these cards.

Would it be better to continue to pay as much as possible onto these credit cards to pay them off quickly, or do you think I should consolidate the debt on these and get a loan of £12,000 over 3 or 4 years at 7.7% p.a (this is currently on offer for me). Over 4 years the loan interest would amount to nearly £2,000 (£1,400 over 3 years). There is also an interest-free period on my husband's card until June next year for about £1,400.

Any help or advice would be greatly appreciated!

MFWannabe

Hi
I don't think anyone on here would recommend getting a consolidation loan; a lot of people on here have done that themselves and then gone and spent on the credit cards again and ended up in an even worse situation!!
Can you get another 0% credit card to transfer some of the debt to? At least then the full amount of what you pay will come off the amount owing
Consider posting an soa on here so people can advise where you can make cutbacks to pay these cards off asap

NorthernLas

You could use the snowball calculator and concentrate on paying off the card with the highest interest rate first. http://www.makesenseofcards.co.uk/snowcalc.html

If you get a loan, you might be tempted to keep the cards and not look at what you spent the money on. Is there anything that you can ebay? Have you looked at Martin's article on debt and how to get out of it?

cobblers_boy

Hi

Would have to agree with Freez. If you have the extra £90 a month you are considering paying on a loan then the standard recommendation would be to use that to pay off your credit cards instead. Always starting with the highest interest rate first and then snowballing onto the next highest rate. If you can get another 0% card then great.

However to ensure you are serious about paying everythig off as and when you clear a credit card make sure you actually close it and don't leave it with a nil balance. If you leave it open there is always the temptation to use again if there is an emergency or to pay for one small treat. One small treat becomes two and you end up back where you are started. The same principle applies to a loan as if you pay the cards off but leave them open you run the risk of doubling your debt if you use them again and are then in a far worse situation than when you started.

Good luck for the future

CB