Stuck with horrible credit card debt

junglist_matty

I'm 27, left university 4 years ago with no money and a whole heap of student loan debt and student overdrafts, since then I've accumulated various debts and jiggled them round, paid a few off and now I'm left with:

Virgin credit card (29.9% APR): £3750
Santander credit card (29.9% APR): £2200

I've also got an unsecured loan that I'm not fussed about as I'm paying this off sensibly and used the money to consolidate other debts:

Tesco loan (12% APR): £3000 (2 out of 4 years are remaining)


My credit rating points score is 949 (doesn't mean much to me, but it looked pretty bad on the scale).

I never miss my payments, I have gas, electric, water, mobile phone, sky tv accounts in my name. I take home £1800 a month.


My issue is that I can afford to pay £250 a month towards my two credit cards (which I've been doing for a year and not used them once). However, the balance isn't going down and I'm fed up of paying 30% interest, simply giving away my money. If I had an unsecured loan I could easily pay £6000 in two years (£250 a month). However, nowhere will give me a loan!

I've tried ringing the credit card companies and they are not willing to reduce interest although they have put spending restrictions on the accounts (Although I don't use them anyway).

Any advice would be much appreciated,

Tixy

If you cannot get a loan then its probably down to the amount of debt you already have and the banks believing you could not afford to service a new loan on top of your existing debt (they won't take into account that you want to consolidate because you might not, or might run up the cards again).

You are not alone in being in this position and finding you cannot reduce the cost of your debts. All you can really do in this situation is focus on paying as much as you possibly can to your debts and freeing up money from anywhere else in your budget to clear them quicker.

if you are paying £250 a month presumably the balances are reducing by about £100 a month at the moment? - on a quick snowball calc if you continue to pay £250 the debts will be clear in 36months, if you could work out a way to increase that to £300 a month they'll be gone in 28months.

CLAPTON

what do your credit records actually say?


the monthly interest on your credit cards (i.e. 6k at 29.9% APR) should be about 140 per month; so if you are paying 250 per month then the debt should be falling at the rate of over 1,300 per year, so I'm a little confused when you say the balances aren't decreasing

junglist_matty

Currently paying:

£100 santander
£150 virgin
£122 tesco loan

Both cards are frozen (can't make purchases) I could stretch to:

£200 santander
£300 virgin
£122 tesco loan

roughly how long would the credit cards take to repay at that rate and how much interest will I have to pay?

Thanks.

junglist_matty

CLAPTON wrote: »

what do your credit records actually say?


the monthly interest on your credit cards (i.e. 6k at 29.9% APR) should be about 140 per month; so if you are paying 250 per month then the debt should be falling at the rate of over 1,300 per year, so I'm a little confused when you say the balances aren't decreasing

12 months ago the balances were over the agreed limit due to interest charges. Then I got more and more charges so minimum payment never brought down the balance, I realised this after taking a blind eye and just accepting the direct debits of about £70 and £90 respectively. I have in the last couple of months had a payrise and started to look seriously at getting rid of my debt as I have money to do so.

Thanks,

Tixy

junglist_matty wrote: »

Currently paying:

£100 santander
£150 virgin
£122 tesco loan

Both cards are frozen (can't make purchases) I could stretch to:

£200 santander
£300 virgin
£122 tesco loan

roughly how long would the credit cards take to repay at that rate and how much interest will I have to pay?

Thanks.

£500 a month on cards would have them cleared in 15months and the total interest between now and then would be around £1200

pvt

junglist_matty wrote: »

My credit rating points score is 949

No it isn't. Your credit rating points score is meaningless, and something you've wasted £5 buying off a CRA.

Income of £1,800 pcm. Debt of approx £8,000. Have you got student loans on top of that as well?

You say you can only afford £250 pcm to repay the CC debt, and I presume you're paying about £200 pcm to service the Tesco loan, that leaves £1,350. That's a pretty comfortable income to live off. You sure you need it all, or could you find a way to find a bit more to pay your debts off with.

My advice is post on the debtfreewannnabe forum and ask for some advice with living on less to free up more for repaying loans. They'll be much gentler with you there.

Yes, it would help a little if you could find a way of paying off the CCs with a loan at a better rate, but as others have suggested, you're unlikely to be leant any more money as you are too much in debt already.

izools

Surely if you've been consistently over your limit for a while your credit worthiness will be seriously affected.

Both the cards you mention report on your credit file, every month:

Balance
Limit
Amount Paid
Whether or not the amount paid was the minimum, or more

You will appear to be seriously struggling, and managing the accounts poorly to any creditor that sees your credit file.

This is why you're being declined.

If you pay well above the minimum for six - twelve months, and get the balances down to under 66%~75% of the limits, you'll stand a better chance of acceptance for a deal elsewhere. Owing a high percentage of a credit limit is an absolute killer to your credit worthiness.

junglist_matty

izools wrote: »

If you pay well above the minimum for six - twelve months, and get the balances down to under 66%~75% of the limits, you'll stand a better chance of acceptance for a deal elsewhere. Owing a high percentage of a credit limit is an absolute killer to your credit worthiness.

Thanks, this is useful help

I have just organised set monthly payments to service these debts of:

santander: £200 per month
virgin: £300 per month

I'm just looking forward to the day when they are clear and I can start saving the £650 a month rather than paying for the silly lifestyle I lived a few years back!!! ...Live and learn as they say; I'll get there in the end!

Gra76

Credit cars were the bane of my existance when I was younger. I racked up a fair amount of debt on 3 credit cards over approx 2 years, it would get worse everytime they increased the limit and fortunately I hit a point where I realised it was going to cause some problems if I didn't do something about it.

If you can't get a loan to consolidate the debt have you considered shifting the debts to another credit card with a zero interest rate for 'x number of months'? If you have to pay a transfer fee it'll be worth it because you'll actually see the balances start to drop far quicker than you will leaving them on cards with 29.9% rates.

I went from paying a ton of money every month and seeing very little decrease in the balances to seeing a large sum disappearing from the balances. Once the 'x number of months' was a couple of months from running out I'd get another zero interest rate card and transfer the remaining debts to that until the debts were gone altogether.

Admitedly I don't know if credit card companies are wise to this these days, I'd imagine they are and if nothing else will probably have a higher balance transfer fee than they used to when I did it, but if you can do it then it'll save you a fortune in interest and you'll be out of your situation a lot quicker.

[Deleted User]

Gra76 wrote: »

If you can't get a loan to consolidate the debt have you considered shifting the debts to another credit card with a zero interest rate for 'x number of months'?

The OP doesn't stand a chance of getting a decent BT offer with a history of overlimits, minimum payments and a high level of debt to available credit.