Credit card,loan or both?

hebeGB_2

Hi there, this is my first post so please be gentle with me!

I have a credit card balance of £7,500 and an overdraft of £2,500. I would like to start paying these off over 60 months. Having researched the site I seem to have three options:
1) get a superbalance transfer credit card to pay off both - virgin seem to be offering 0% for 19 months with 4% fee
- get a loan to pay off both - loans for £10k from about 6.3%
- get a loan and credit card to pay off part each.

I am slightly nervous about applying for either a loan or a card as don't want to get a potential refusal and mark on my credit record, so want to make best decision about which to apply for first (I have a storecard with smallish balance and the provider recently capped my limit, which has made me feel nervous about my rating - this may be unfounded concern though).

So, my dilemma do I apply for the credit card first, risk not being offered full balance transfer amount (say they only offer £5k) and then be faced with a much higher interst rate to get a loan for the remainder OR just go straight for a loan and just accept the interest rate? Or another option? I'm not sure how likley I would be to get a credi card that would pay off the full balance transfer.

Anyone have any thoughts or advice? In terms of credit rating does it look better to apply for a credit card or loan?

Note I also have one storecard with small balance and another credit card that I have had for a while, with a high balance but it has a very low APR for life of balance which I treat as a loan. I recently paid off another loan.

Thanks for your help, look forward to hearing people's thoughts :j:j:j

YorkshireBoy

What's your...

1. Income?
2. Total available credit?
3. Total used credit?

2 & 3 should include both credit cards and overdrafts

There's another option to consider...the MBNA LOB card, at 5.9% APR with a 1.5% fee - assuming you don't already have an MBNA run card?

hebeGB_2

Hi there - my income is about £34k,

My available credit accross all cards is about £20k and that's what I've used!

That doesn;t sound great does it!:o

hebeGB_2

PS - I looked at that MBNA card and used calculator to work out cost of borrowing, and was equivalent to a 6.6% loan, in which case I thought a proper loan may be better?

YorkshireBoy

hebeGB wrote: »

Hi there - my income is about £34k,

My available credit accross all cards is about £20k and that's what I've used!

That doesn;t sound great does it!:o

No it doesn't.

And when you add on the overdraft it's even worse!

Lenders use some key ratios when credit scoring you...

1. Available credit to income (your is at least 59%)
2. Used credit to income (yours is at least 59%)
3. Used credit to available credit (yours is at least 100%)

Analysis:

1. This isn't 'too' high.
2. Lenders don't generally like to see more than 50%
3. You're maxed out! Any new applications make you look desperate (which you are!)

If you have a mortgage the situation is even worse.

If you don't have any immediate/short term need for other credit then a speculative application or two may provide some success, but forget any thoughts of 6.3% APR representative rate loans because with your numbers above it isn't going to happen in my honest opinion.

CLAPTON

with a debt of 20k and a modest income of 34k and living (I assume) permanently in your over draft and having maxed out all your credit cards, you sadly look as some-one not coping very well financially.

I would say that you would be very unlikely to be give a 10k loan from anyone let alone one at 6.3% .. a potential lender would 'see' your total debt exposture as being 3k on a 34k salary (you may intend using the new loan to transfer other debt but you are under no obligation to do so.
However, depending upon the APRs of your other debts then it may well be worthwhile trying for a low life of balance CC and transfer as much as possible to it.

hebeGB_2

Hmmm...thanks for the thoughts. It is frustrating because the whole point is to transfer balance/OD so I can finally start paying it all off properly - at the moment the CC is costing 17.9% APR and the OD is similar and at this rate both will take forever to pay off. My bank is offering a 6.9% loan so might be worth trying them first. My final option if all else fails is to ask my parents for a loan but I would prefer to avoid this if I can.

aanchalsharma

i want credit cards how i can issue a credit cards ?

Tixy

hebeGB wrote: »

Hmmm...thanks for the thoughts. It is frustrating because the whole point is to transfer balance/OD so I can finally start paying it all off properly - at the moment the CC is costing 17.9% APR and the OD is similar and at this rate both will take forever to pay off. My bank is offering a 6.9% loan so might be worth trying them first. My final option if all else fails is to ask my parents for a loan but I would prefer to avoid this if I can.

How much can you afford a month towards these debts?

If you could afford to pay £250 a month then you could clear the debt in 60months anyway, just keeping them as they are.
Obviously it would be good if you could move some of it to a cheaper APR but if you can't then it doesn't need to take forever to pay them off.

hebeGB_2

Hi there, bit the bullet as it were and got a credit card with Virgin with limit that will go a long way to covering off what I need - hooray. Just need to deicde what to do with the remainder now. Thanks for all your advice, and also the flag that yes, my finances don't look so great so I really need to sort them out! Will keep coming on forum for further tips on money saving in the future. :beer: