loans to repay credit card debts

Milltowngirl

Im new here and have been reading the forums for advice on consolidating some credit card debts. Ive read numerous times on here posters saying that when considering whether to give you a loan, banks consider your overall risk to be the amount of the loan and the credit card debt, because there is no guarantee you will repay the credit card debt etc.
I wondered why/whether it is not different if the loan and credit card are through the same lender ? I know that the credit card companies are often run as seperate companies but you'd assume they'd still have some kind of working relationship and that a condition of the loan would be the repayment and closure of the credit card ?
Does anyone have any experience of whether this ever happens ?

Peelerfart

If you are repaying the credit card from a bank with a loan from that same bank then you will save money from a lower APR yes ?

Therefore it must cost the bank to do this - what's in it for them, why would they do it ?

Milltowngirl

Hi, thanks for your reply.

My thought would be that they would get the debt repaid quicker, because if youre only making minimum repayments on the credit card its going to be a long time before they see the total repaid. They may lose out on some interest but theyd see the total amount quicker.

I used to work for Natwest - albeit over 10 years ago - and Im sure they used to view loans like this - to clear their own debt only - differently, in the sense of being more leniant in the application/affordability process because their overall risk was no greater ?

I just wondered what peoples current experiences of these situations have been ?

Dabooka

A pal of mine with First Direct (I think it is anyway) was able to "convert" his CC balance to a loan and they closed the account, so it is possible. This was about a year ago incidently.

HTH

Tixy

Some banks will do this. Eg HSBC once offered to me to put my overdraft and credit card balances into a personal loan and reduce the limits on them both right down.

The problem is usually people asking for advice on here are often trying to consolidate several credit cards / debts from various different banks which then doesn't leave this option open for them.

If you are considering asking your bank to do this then they it may mean they will take a closer look at your finances and if you also have an overdraft you use all the time it could trigger them to decide not to renew it at next renewal time, or they may also suggest removing your overdraft as a condition of the loan.