Just paying off interest!

ridgers84

Hi everyone.

I have a dilemma.... my partner and I have a Virgin Credit card with a balance of approx £2000 on it. Now, we had a letter from Virgin to say they were going to freeze the account (but not the interest!). We didn't mind one bit as it was always our intention of paying it off and closing the account before virgin decided to freeze it anyway! The problem is, we are paying £50 off a month - which really is all we can afford right now, but the balance isn't being reduced it is all going on interest.

We called Virgin to ask for help. We asked if the interest could be frozen like the account, that way we would be reducing the debt until the balance reached £0. Sadly, we weren't able to do this, and to be honest, the guy on the phone had an 'it's your problem' kind of attitude. He said he could pass us on to another colleague who could talk about payment options to us, however he warned this would have a negative effect on our credit score...

So it a nutshell I would like advice on what is best to do in this situation. Are we getting fobbed off by Virgin or is there genuinely nothing we can do. We thought about a balance transfer but we are not sure we would get accepted. Also if we did get accepted we are not so sure it would be for the £2000 needed to clear this debt.

Any advice greatly appreciated....

Martin

chattychappy

Well, it seems you're paying 34% APR. If you have a "clean" record, I would certainly apply for a 0% card. If, say, you could get a £2000 limit on 0% for 12 months and continued to pay £50 a month, then (assuming a 3% fee) you'd knock it back to about £1460. Hopefully you'd have a better ongoing rate after that too (and you could "opt out" of any rate hikes).

Even if you don't get the £2000 limit, anything would be helpful. Also bear in mind that your partner can apply for a card and BT your balance (or vice-versa).

I'll take it as read that you've looked at maximising income/reducing expenditure.

YorkshireBoy

If you do decide to try and BT the debt away, then choose the next card very carefully...because even a 0% deal on a £2K debt could cost you £60 a month initially if the minimum payment is 3%.

If you can't find an extra tenner a month now, where will it come from to service the new card?

CH27

What reason did Virgin give you for freezing your account?

ridgers84

Thanks for the replies so far.

CH27 - We got a letter which advised us of two changes: 1) A higher rate of interest was going to be applied to the account. If we declined the first option then the second would apply: 2) Freeze the account, but not the interest, therefore the interest would remain the same until the balance reached £0. We opted for the second because we have no intention of using the account again when the debt has been satisfied.

Chattychappy - You could be right, 0% is looking good, even if I still have a balance after the 0% period, it would be less than what the balance is now.

Just feel that Virgin could do more to help, I know its's not their fault but I've heard of many credit card companies who can freeze the interest if the account is then closed when it reaches £0. We've never ever missed a payment or anything!

opinions4u

ridgers84 wrote: »

Just feel that Virgin could do more to help, I know its's not their fault but I've heard of many credit card companies who can freeze the interest if the account is then closed when it reaches £0. We've never ever missed a payment or anything!

Perhaps they don't think it's fair that other customers should pay interest and cross-subsidise a freebie for you.

You are mistaking a commercial operation for John Paul Getty II.

CLAPTON

in general CC don't freeze interest unless you have defaulted on the debt
so if you stop paying for a period, they will default your a/c and trash you credit record for 6 years; add lots of fees and interest for a few months but after a while they will often agree to freeze the interest and allow lower repayment schedule.

sadly, CC companies aren't there to 'help' people, they lend money and want the capital back as well as being paid interest