Barclays loan for consolidation

bigdebt123

Hi All

Hoping to canvass views on a loan offer which I have received, as I have not had the chance to "shop around" and, for reasons which will become obvious, I think my options may be limited.

Over the past few years I have gotten myself into a bit of difficulty with credit card debts to the extent that I would now like to consolidate about £40,000 worth of debt. I now have my expenditure under control, and recognise I was very stupid allowing things to get out of hand in the way they have. I do have a well paid job but even so, it's taking a scary proportion of my income.

As things currently stand, the £40,000 credit card debt is costing me about £620/month in interest and I'm only managing to make repayments of £895/month, so at this rate it is going to take forever to pay off.

Hence the decision to consolidate. I have spoken to my bank, Barclays, who have agreed in principle to an unsecured consolidation loan of £40,000 at a fixed APR of 17.9% They will offer it over a term of 7 or 10 years. At 7 years, repayments would be £810/month, at 10 years they would be £687/month.

Unfortunately, there is no flexibility for overpayments (which I hope to be able to do in future years) although my manager says "there is a process to reschedule loans where clients wish to change the amount and term of the loan... whilst this will involve a new application the process is fairly straightforward". Of course, that is one of the advantages of credit cards - they are very flexible - but you pay for the privilege.

So, is taking this loan a good strategy for me to adopt and, if so, does this loan sound like a decent deal?

Thanks in advance

BigDebt

LeeSouthEast

Is that APR any better than your credit cards? It's very high...

bigdebt123

Thanks for your reply.

The cards all have different interest rates so it is very confusing...

MBNA - a shocking 34.95%
Halifax - between 24.93% and 26.93% which is increasing to 29.95% pa in December
Barclaycard - 17.9%
NatWest - 13.1%

So, I guess that answers some of my question - consolidate those rates which are higher than Barclays is offering?

[Deleted User]

no chance of re-mortgaging?

Tixy

Yep

Would seem not point in consolidating the natwest at the very least. Possibly not the barclaycard either, although is the barclays offer dependant on paying off the barclay loan?

Plus if you keep some of it on card it gives you partial flexibility.

If you consolidate cut up and close any cards that have been cleared. And please don't fall into the trap of running up more debts. So many consolidate to pay off debts quicker and end up in more debt not less.

Also consider having a look at the snowball calculator at www.whatsthecost.com and plugging in the cards as they are now along with the repayments and APRs. That will give you a starting point to compare any other products to in terms of total interest you would pay, how quick you would be debt free etc.

LeeSouthEast

I'd (personally) consolidate the higher rates, and leave myself flexible on the other two. This will reduce your loan amount, and give you the opportunity of clearing the other cards as quickly as spare cash allows. This will then make the loan less of a burden on you in the long term!

bigdebt123

Great advice, and some very useful tools, thank you all

LeeSouthEast

Stick around. MSE is one big money-saving family

Welcome.

PNPSUKNET

I thought 25k max on unsecured loans?