Credit card tart needs advice.

Calling14

Presently looking at transferring 3 balances I have which will total 10k to Capital one - they have offered me 0% rate over 15 mths.
The minimum payment is 3% which I would struggle with. Is this minimum payment rate high?

thenudeone

New rules coming into place shortly mean that the minimum payment must be enough to cover interest and charges plus (I think) at least a small part of of the balance, to avoid a situation where someone making only the minimum payments ends up with an ever-increasing balance.

It may be possible to get a lower minimum payment on another card, but will you get 15 months at 0%?

The 15% offer you have been given is pretty good. If you would struggle to pay off even 3% a month, you have been spending in excess of your income and sooner or later you will have to pay it back.

You have been lucky to have been given this offer and unlikely to get a better one. I would take it and grasp the nettle of settling your debts. You will have paid off around 40% of the debt by the time the offer ends which means you'll be paying less interest from then onwards, if you can't find another 0% deal then.

Calling14

I acquired most of the debt following a relationship split. As ex worked away any purchases/loans were easier to do in my name. As he struggled to buy me out of the house I was left with these. So much happier now its only money. I will just have to take another lodger in when mine leaves in June.

So looks like no holidays this year unless lottery win or meet someone rich;-)

Calling14

Today taken out a Nationwide credit card I can tf 3000 to them and minimum repayments with them only 1% interest free for 17mths. Will maybe split remaining 7k between capital one and another. As minimum payment of 3% would leave me with nothing to live off and dont want to get into the trap of using credit cards to get by plus still want to enjoy life.

Hax

Calling14 wrote: »

As minimum payment of 3% would leave me with nothing to live off and dont want to get into the trap of using credit cards to get by plus still want to enjoy life.

By reducing the monthly amount you pay off the cards and thereby extending the length of time taken to pay the debt off, aren't you still just using the credit cards to "get by" and "enjoy life"?

Sounds like a false economy to me - particularly as there is a chance that sooner or later you will run out of "nice" deals to transfer to and will be forced to pay more - quite possibly without the option of a 0% deal meaning that you would be reducing the balance by very little.

Myself, I would grab the bull by the horns, do without the luxuries you want to "enjoy life" and take full advantage of the 0% deal to pay as much off your balance as possible - that way, when the 0% deals run out, you will have a greatly reduced balance to manage.

Continue paying just the minimum (especially at just 1%) and in 17 months time, your debt will be more or less where it is now - you will have knocked about £500 off your £3000 debt and will then face an interest rate hike and (probably) a minimum payment hike.

You'd also be wise to keep the repayments constant. By that, I mean as your balance reduces so does your minimum repayment (1% or £3000 is £30 then 1% of £2970 is £29.70, etc...) So, keep making the £30 each month regardless of the drop in minimum payment - it's a small difference, but it'll add up.

If you're serious about clearing the debt, put as much on 0% as you can and then throw as much money as possible at reducing the balance(s) before the 0% runs out.

Calling14

Understand your message Hax would gladly take the bull by the horns but have cut down everything I spend to the bare minimum. 3% minimum payment be too much for me to take on would worry just in case couldnt meet it each month. I take in a lodger so any rental income goes straight towards cards in addition to my payments but tend to have gaps when not renting. Tends to be student teachers so gaps in summer months.

By enjoy life I really meant not worrying myself silly over payments not out partying every night or holidaying etc.

Do overpay most months any spare cash gets put into my debts. Will definately take your advice and keep to a fixed payment as it does make a vast difference to the total debt.

Determined to be debt free one day ;-)

Hax

Glad to hear that you're already overpaying when possible - I think that's the most important thing

Calling14 wrote: »

Determined to be debt free one day ;-)

Good luck with your quest - I have the same aim - hoping to be debt free by this time next year - with a bit of luck, by the end of this year - but expecting the odd bill to pop up here and there to stop that from happening - hence my estimation of "this time next year"!

Calling14

Hax wrote: »

Glad to hear that you're already overpaying when possible - I think that's the most important thing



Good luck with your quest - I have the same aim - hoping to be debt free by this time next year - with a bit of luck, by the end of this year - but expecting the odd bill to pop up here and there to stop that from happening - hence my estimation of "this time next year"!

Thats what worried me about a high minimum payment the unexpected bill happening. No forecast as to when I will be debt free not for a few yrs yet.

Thanks for the advice, determined to just try my best and good luck with clearing your debts:j