Consolidate with a personal loan or not?

Dollyadams

I have the following credit card debts;

Egg - balance owing £3160. Interest free period coming to an end.
Halifax - balance owing £2250. Interest free until July 2012
Post Office - balance owing £590. Interest free until Dec 2011
M & S - balance owing £50
Nationwide - balance owing £20

As you can see, approaching the end of the interest free periods and not happy about the prospect of paying interest at around the 18% APR mark.

Have little prospect of being accepted for more cards, as I have been transferring for years between companies and have probably had a credit card with most of them by now.

I am considering consolidating by getting a personal loan and just wondered if anyone had any opinion on this. I bank with Nationwide and have done a 'soft search' on line. Been quoted a rate of 12.9% on a loan of 6k over five years. Wondering if I should I take this option?

Recently divorced I am expecting a share of the ex matrimonial home in the future. Have to wait for the house to sell though (its on the market). When I get this money I plan to settle my debts but its anyone's guess how long this may take.

What do you think? Should I go for the loan or just continue paying the cards with accrued interest knowing that one day I'll get money from the house.

bengalknights

3 of the cards you could just save up and pay but for the other 2 if you can get the loan then consolidate and close them.

jonesMUFCforever

What is to stop you taking out a consolidation loan - then spending on the cards again?

Cat2011

I'd pay off the m&S and Nationwide, then ask them if they have any 0% deals you can use. If not - then cancel them. How much are you able to pay off per month? Can you increase this with another job/selling things?

You might find that paying 12.9% for 5 years makes you worse off than paying 18% for 2 years. Input the 2 scenarios into a snowball calculator, and it'll tell you which will pay off the interest more quickly.

http://www.makesenseofcards.com/snowcalc.html

Cat2011

A quick (probably inaccurate calculation due to not having all the details) shows paying £150/month off your debts, whilst snowballing will pay your debts off quicker than getting a 5 year loan.

moonrakerz

jonesMUFCforever wrote: »

What is to stop you taking out a consolidation loan - then spending on the cards again?

Unfortunately, this is what far too many people do ...........

If you take out a loan, you MUST cut up all the cards - and don't even think about getting another CC until the loan is cleared.

Tixy

Its very difficult for anyone to advise on whether a consolidation loan would be financially a good idea without knowing the APRs on all the debts (and what rate the 0% will revert to), and how much you can afford to repay a month.

You say you've had cards with most lenders by now - do you still have any accounts open but with nil balances? if so see if any of those would offer a 0% deal or low life of balance deal. If you have been closing these old accounts as you finished using them then there is nothing to stop you applying to old companies again - you usually only need to have closed the account 6months before to be treated as a new customer. (Though that said it is generally harder to get new 0% deals now than it used to be - and of course would very much depend on your financial circumstances as to whether you'd be likely to be accepted).