CC's going out of control. HELP

dhcp_2

This is my situation

5 grand on Egg - paying 150 a month
5 grand on Marbles - paying 150 a month
3.6 grand on Capital One - paying 150 a month
3 grand Loan - paying 145 a month. Not much left on this loan.

Im in deep sh*t here as you can see. What is the best way I can pay off all these debts as quick as possible. I know I put in as much as I can as soon as and I have considered a Loan to consolidate all these into one.

I spoke to Egg who said they could do a Loan at approx 15 Grand workign out at 325 pounds a month. This will kill off all my credit cards so I can chop the damn things up.

the interest rate on the loan is 6.9% APR and is charged on what I owe and not what I took out if that makes any sense.

Is this the best way to approach this? Please give me any advice so I can get rid of these worries asap.

Thanks in regards

Reaper

Depending on your credit rating you may have other options open to you such as 0% cards which will give you a breathing space to pay off some of the capital.

Read Martin's article on Where to start with problem debts for starters. It provides links to other articles to read as applicable. Ask if there is anything you are unclear on.

zcaprd7

What APR are you paying on those debts?

Galstonian

Depending on your circumstances you may or may not get 0% deals. The Egg offer is certainly not a bad rate, it is probably a lot better than what you are paying just now.

Reaper's link to problem debts is a good place to start.

dhcp_2

I think it as about 12 - 17% APR on the cards. I had moved a large sum onto EGG but now the 6 months is up on the 0%.

Thinkign about the loan that has been offered it seems that my outgoign payments will be lower than what I am paying and if I removed the protection plans etc, the cost would be even lower.

I really did not want to apply for another card again as I am sick of them !

zcaprd7

I'd take the loan (avoid any payment protection plans, on loans or credit cards, they're cack) - make sure you can manage the minimum monthly payment, but try to get the shortest loan length possible...


EDIT:Also, start living within your means (use the MSE budget planner), otherwise you'll run up another £5k and be in the same position in 12/18 months time.

mrcow

The good thing about Egg loans is that they are usually totally flexible (but check this out before you sign). That way, if you are able, you can pay the loan off as early as your means allow (thus saving more interest). There are certainly better loan rates that you could look at, but many of them have early repayment charges tied in.

zcaprd7 is right too. It may sound harsh, but please take this as an opportunity for a clean start. If you've found it hard to control credit card spending in the past, then please get rid of the lot of them (chopping them all in half can be a very liberating experience) and PLEASE don't be tempted to apply for more plastic.

almahadeus

This suggestion may be way out at left field so feel free to ignore it or other people to comment if this would be a bad idea:

My dad was in a similar situation some years back although his loans added up to tens of thousands. He wrote to each credit card company individually and asked if he could freeze his accounts (to stop the interest accruing) and pay a minimal amount of money back each month (eg £20) until the debt was all paid off. I can't remember much but I think he had stopped making payments at all a few months earlier as he couldn't afford to and so the card companies were just glad that he would start to pay the money back, even though it was only small amounts. (Obviously don't just stop making payments cos this would be bad for your credit rating). Does anyone know if it this would be a good idea?

If your situation was so bad that you couldn't sustain your current payments and the debt was spiralling out of control then Citizen's advice bureau would be a good place to start.

I think you should be wary of any offers from credit card companies to consolidate your debt, and you should look at the various help organisations which are free and non-profit, links are available from this website.

Xbigman

5 grand on Egg - paying 150 a month
5 grand on Marbles - paying 150 a month
3.6 grand on Capital One - paying 150 a month
3 grand Loan - paying 145 a month. Not much left on this loan.

Can you meet these payments?

I'd suggest a 13.600 loan and keep your current 3K loan going until completed. (I'm reading your post above to mean this is close).

You only need 13,600 to clear those cards. Debt clearing tip. If anyone consolidates they should always borrow the minimum. The 'plus a bit for a rainy day' strategy means you start your debt clearence strategy by spending the 'bit' and then you pay interest on it. That said, always borrow enough to actually clear what you want to.

And remember to actually cut up and cancel those cards.
Regards



X

westernpromise

dhcp wrote:

Is this the best way to approach this? Please give me any advice so I can get rid of these worries asap.

Thanks in regards

I'd take the loan to get the APRs under control, then cancel the unused cards. As this is a flexible loan, start applying for more 0% cards in a few months' time. Any 0% BT offers you can get you can route through your Egg card into your bank account and thence off your loan.

Essentially you'd be grabbing the opportunity Egg are offering to get the interest rate down, while not letting that be the end of the matter. It may be possible to get chunks of the debt down to 0%, which is going to make a major difference to the interest you have to pay.