Advice sought: paying £650.00 (!) per month in min payments on 2 x MBNA cards...help!

On_A_Financial_Death_Bed

Many thanks for reading -- I greatly appreciate it.

Cutting to the chase, I'm in a mess. I currently pay just over £650.00 to MBNA per month (servicing just two credit cards: one with £19,550 of debt on one; the other with £12,500 of debt on) in terms of minimum payments. The APR on each card is 30% or so. I therefore pay off almost nothing on each, i.e. almost every penny of this £650.00 figure is in interest. Added to this, I have 12 other liabilities per month which I have to service. Now, admittedly, I am just about managing to service all my debts, but it is these two MBNA debts which, in the none too distant future, may see my ability to service debt unravel, i.e. if there was some way of being able to reduce the minimum payments on these debts -- or even the APR -- then I could look to spend more of this £650 on reducing debt rather than simply treading water and only paying minimum payments.

I just wondered, therefore, if anyone might have any suggestions for me being able to sort this situation out?

I should add that I have done exhaustive searches of "credit card shuffle"-type scenarios; 0% offers; etc. However, with the size of my outstanding debts then, understandably, I'm not able to be offered other credit cards -- not to spend on, but simply to facilitate 0% balance transfer deals with -- nor, with my impaired credit record, could I hope to secure personal loans to re-gear my debts.

Should anyone have any advice to give I would be awfully grateful.

Many thanks for reading!

the_insider

Fill us in an SOA and we'll have a look at ways you can cut down your expenditure to free up to throw at the highest APR debt and start you on your debt free journey.

On_A_Financial_Death_Bed

the_insider wrote: »

Fill us in an SOA and we'll have a look at ways you can cut down your expenditure to free up to throw at the highest APR debt and start you on your debt free journey.

Thanks so much for your reply -- it's extremely kind.

Pardon my complete ignorance here, but I'm not sure what an "SOA" is? If you'd kindly be able to let me know, then I'd be happy to fill one in.

Again, thanks so much for taking the time to reply.

Tixy

Hi

A SoA is a statement of affairs - monthly details of your income & expenditure and details of debts - have a read of this link here Help for First Time Posters & SOA Calculator which includes a link to the calculator.

This thread The Big Guide to Becoming Debt Free explains why people ask to see a SoA and why it might help.:)

On_A_Financial_Death_Bed

Many thanks, Tixy -- greatly appreciated!

On_A_Financial_Death_Bed

the_insider wrote: »

Fill us in an SOA and we'll have a look at ways you can cut down your expenditure to free up to throw at the highest APR debt and start you on your debt free journey.

Hi again to: The_Insider / Tixy,

Here is my current "SOA" ... only should you have time, any recommendations that you may have regarding getting myself out of the horror that is £650.00 of 2 x MBNA monthly minimum payments would be gratefully received.

Kind regards

My SOA

Monthly Incomings:

My salary (net) £1,500.00
Partners salary £0.00
Benefits £0.00
Additional income £5715.00
Total £7215.00

Monthly Outgoings:

Mortgage/Rent £2939.68
Service charges £340.00
Council Tax £100
Gas £40
Electric £45.00
TV License £10.99
Food £450.00
MBNA 1 £233.04
MBNA 2 £412.82
Northern Rock £104.00
Capital 1 £280.00
HSBC Gold £75.55
Lloyds 1 £71.56
NatWest Gold £68.24
Halifax £49.12
Tesco £52.00
NatWest M/card £42.29
Lloyds Advance £35.00
Total: £5349.29

Net +/- pcm: + £1866.00 surplus per month for debt extinguishing

MBNA 1 Total Debt £12,311.44 APR 29.95%
MBNA 2 Total Debt £19,539.99 APR 29.95%
Northern Rock Total Debt £9,066.75 APR 9%
Capital 1 Total Debt £9,000.00 APR 9.9%
HSBC Gold Total Debt £2,946.03 APR 30%
Lloyds 1 Total Debt £3,633.60 APR 14.49%
NatWest Gold Total Debt £2,974.99 APR 16%
Halifax Total Debt £2,525.26 APR 17.95%
Tesco Total Debt £2,153.14 APR 18.5%
NatWest M/card Total Debt £1,890.83 APR 16%
Lloyds Advance Total Debt £1,250.00 APR 0% for 6 mths, then 27%

Total Debt: - £67,292.03

Tixy

Hi

It would probably be useful if you could use the make sense of cards calculator. It looks like you might have ommitted some costs from the living costs section (water rates, insurances, travel costs, telephones / internet etc, then things like haircuts, presents, medical costs etc) and you have included your debt repayments in these expenses list.

As it stands it looks like you have a further £1866 on top of your minimum payments to put towards your debts - but it sounds like you are only just making your minimum repayments so you need to work out where this money is going.

This is the best format to get a full picture of your finances - http://www.makesenseofcards.com/soacalc.html

It would probably also help if you could explain the extra income you are showing each month of £5715 and say how many people your food bill is for etc.

triple_choc_chip

Hi,

I'm now getting to the bottom of some of my card debts and have discovered that once the balance is nil I get letters offering balance transfers, some at 0%, one was 9.9% for life which was better for a large balance that would take more than a year to clear. (This way you don't have to apply and risk rejection!)

So, if you've really got £1800 surplus, throw it at the card with the highest interest - the HSBC gold and you can have it cleared in 2-3 months. Then direct the funds at one MBNA and you could clear that in 12 months.

I had a Virgin (MBNA) with a £7k balance, my £200 payments only just covered the interest. I phoned them to say I could pay for the rest of my life and still owe the same so I might as well do an IVA to get rid of it ( along with the others). I spoke to several departments but they finally agreed to reduce the interest rate from 35% down to 12% for 12 months if I upped my payment to £300 a month. That way I paid off half the balance and at the end of that year I was able to transfer the remainder to the 9.9% mentioned earlier.

So take heart and stay focused - if I can do it you can do too! Good luck.

FTW

On_A_Financial_Death_Bed wrote: »

Many thanks for reading -- I greatly appreciate it.

Cutting to the chase, I'm in a mess. I currently pay just over £650.00 to MBNA per month (servicing just two credit cards: one with £19,550 of debt on one; the other with £12,500 of debt on) in terms of minimum payments. The APR on each card is 30% or so. I therefore pay off almost nothing on each, i.e. almost every penny of this £650.00 figure is in interest. Added to this, I have 12 other liabilities per month which I have to service. Now, admittedly, I am just about managing to service all my debts, but it is these two MBNA debts which, in the none too distant future, may see my ability to service debt unravel, i.e. if there was some way of being able to reduce the minimum payments on these debts -- or even the APR -- then I could look to spend more of this £650 on reducing debt rather than simply treading water and only paying minimum payments.

I just wondered, therefore, if anyone might have any suggestions for me being able to sort this situation out?

I should add that I have done exhaustive searches of "credit card shuffle"-type scenarios; 0% offers; etc. However, with the size of my outstanding debts then, understandably, I'm not able to be offered other credit cards -- not to spend on, but simply to facilitate 0% balance transfer deals with -- nor, with my impaired credit record, could I hope to secure personal loans to re-gear my debts.

Should anyone have any advice to give I would be awfully grateful.

Many thanks for reading!

I'd definitely reduce what you're paying to MBNA - they're not a priority debt. Also, only a couple of questions I'd ask.

Are you still using the MBNA cards/accounts, and when were they opened - these two questions are relevant to the next point I was going to make.

BigCraigJohn

At the end of the day charging 30% apr on such large balances is scandalous. I had a Cap 1 that went from 14.9 to 35.9 with a £10k balance. There was just no way on earth I was ever not going to default it.
Ive read of people writing to creditors and asking them to lower the rates, otherwise defaulting might not be such a bad thing as atleast the balances are frozen and you can have a go. I think that as you sense you are not going to be able to/or not want to keep this up for what is going to be forever.
Its exactly what these greedy creditors want, and these are the sort of threads those high and mighty moral people need to read, and see that it is very often the creditors greed and stupidity hiking rates etc that causes issues.

Sure you wont be getting more credit for a while but if you can make say £400 a month towards the balances they will rapidly drop and you'll feel better seeing the balances go down than you will feel bad for having the defaults.

originalmiscellany

I have to ask, but what's the extra income of almost £6k a month? It looks like you could be in a sensible position in a few years but need a bit of a reality check (as others above have hinted at).
The old adage is that you fire fight and the highest interest charge is the one you throw your money at, and once that's been extinguished, you focus on the next highest and so on. Crucially, you're aware of your predicament, and will not hopefully be accruing any other debts...

Have you anything you can sell that you don't use? What have you bought with your debt (67k overdraft)? Is there anything you can sell on ebay, as let's be honest if you have several thousand pounds of junk around the house, selling it on ebay for 1k will mean you're being proactive about clearing your debts, and it will declutter your house too!

Also, looking at your mortgage, would it be possible to go interest only for a few months? At my calculations, you'd need a 300k mortgage on 8% interest for 15 years to get around a 3k mortgage (which is huge and terribly "fatty").
Going interest only at a lower rate 8% say on mortgage rather than the higher for MNBA at say 30% will mean you will clear your overall debts quicker.

Best of luck.