Getting a loan to pay off a store card?

jadorevintage

Hi

I owe about £1200 on a store card and I was thinking of getting a small loan (as the loan would have a lower interest rate than the store card) to pay off the store card. I've looked on some price comparison sites and my bank do a preferential interest rate and the monthly payments seem good and manageable.

I'm over 21, have a pretty good credit rating I reckon, no debt apart from a car loan (a few thousand outstanding but never missed a payment or anything), earn a reasonable amount and have a full time job which I've been in for years.

Does this sound like a good idea?

Any advice appreciated! :D

redpete

jadorevintage wrote: »

Does this sound like a good idea?

There's no straight yes or no answer.

If you pay the same each month then a loan at a cheaper rate is a good idea because you will pay it off earlier and pay less interest.

If the monthly payment is less then might not be a good idea because it might take you longer to pay it off and you might pay more in total interest over the period.

If you take out the loan and pay off the CC bill but then continue spending more than you earn then you could build up the CC debt again and have the loan payments in addition - definitely not a good idea.

YorkshireBoy

How much are you paying off the store card each month at the moment?

What's your monthly disposable income, after essentials.

Jox

I would say no, you may not get the lower interest rate on the loan (I saw one advertised for 8% and when I called up they offered me 17%).
Set up a direct debit to pay as much as you can each month to the store card. Can you afford £100 a month?