What to do with post-"consolidation" available credit?

x_Kaz_x

Hi everyone! I have been lurking for a few days now, and am loving the amount of support and advice that everyone gives

A brief introduction to the position that I am in...

In 2008, my OH was made redundant when I was a student/SAHM and 7 months pregnant with my youngest. Due to the circumstances of having to pay household bills and buy baby stuff with pretty much no income we racked up about £6000 worth of debt. Minimum payments to the credit and store cards were often missed or late, and my credit rating was in shatters (not to mention all the interest rate hikes). OH was able to get a part-time job a few months later (12 hours a week) which covered utilities and food, but not much left to put towards the debt.

OH's hours have slowly increased and are now at approx 33 hours a week and in July 2010 I started full-time work. For the past 10 months I have not missed a minimum payment and payed as much on top of the highest rate debt as I could. I managed to get the debt down to just under £5000 and now that my credit rating has been rescued slightly I was able to get a loan to "consolidate" all of my debts.

My loan is a graduate loan for £3500 over 3 years with LTSB at 11.9% with no early payment penalties.

(Oops, did I say brief :rotfl:)My question is... now that I have paid off the credit and store cards, what is the best way to deal with the available credit?

Here is a list of the cards, credit limits and APRs

LTSB Mastercard £1200, 30.0% APR
Barclaycard Gold £250, 32.9% APR
CapitalOne £400, 33.0% APR
Aqua £1650, 38.9% APR (This one has been cancelled to avoid a rate jack)

I also have a Very account with a £1875 limit, a Studio account with a £700 limit and a SimplyBe account with a £850 limit (all have balances of £0)

I haven't used any of the credit cards for about 18 months, but I want to build my credit rating back up, so I am thinking of using one or two of the cards to buy petrol and groceries and pay in full each month.

Should I ask Very for my limit to be lowered? Should I cancel all of the credit cards but one or two? Which ones should I keep? How should I use them? Any other thoughts or ideas?

Kaz
x

bottleofred

Hi Kaz and welcome to the forum,

You should always pay off the most expensive interest first, so concentrate on the cards etc with the highest interest rates. Use credit cards only in an emergency and be sure to clear them every month.

Good luck

Red

CH27

Close all the account except one credit card for emergancies.
Don't risk running it up again & ending up in double the debt.

x_Kaz_x

Thanks for the welcome

Sorry, I should have said that all the cards have balances of £0 now... so the highest interest is the loan, which I am hoping to pay double the payment each month (which is about what I was paying before) and reduce it by about 18 months.

x_Kaz_x

CH27 wrote: »

Close all the account except one credit card for emergancies.
Don't risk running it up again & ending up in double the debt.

Thanks... That's exactly what I don't want to do (rack up more debt)

I will need to decide which one I want to keep ... hmmm...

ALIBOBSY

i would keep 2. The LTSB one as it is the lowest rate and has a biggish limit as an emergency fallback-use it a couple of times a year and pay off to keep it ticking over.
I would also keep the capital one card and use it for petrol etc and pay off each month. Capital one regularly update the credit files so look good for future credit, plus you get the free credit reports and credit monitoring service(provided through equifax).
Well done on paying them off.

Ali

smartiedriver_2

I second Alibobsy, but wonder if in time you might do better getting a cashback or tesco clubcard credit card that way you will accrue points/cashback on your household spending.

You would need to be strong though, and close the capital one card as soon as the new cashback/points card was approved!