Loan to pay off card?

suz_87

so my fiance has quite bit of credit card debt which we are trying to pay off. We currently have a loan with Santander and have been offered to increase this amount. I was just wondering if its a good idea to increase the loan to pay off the cards and then try to pay the loan off as quick as possible?

He has approx £4000 debt we prob wouldn't be able to pay off all of this as I don't think we would get a big enough loan but if pay the majority off with the loan the concentrate on the final bit of the cards then try to pay the loan off quickly?

Not sure if any of that makes sense?

rising_from_the_ashes

Hi Suz, generally it's never a good idea to get into more debt to try to get rid of existing ones (it only works for around 15% of people - with the other 85% ending up in a worse situation) - also, if you wouldn't be able to clear all the debts, I'd say (from experience!) it's even less likely to work.

Much better to try to make cuts in your current outgoings and throw any spare money to clearing the existing debts first.

Post up a SOA http://www.makesenseofcards.com/soacalc.html and you'll get loads of advice on where this may be possible. HTH

suz_87

Thanks that's what we are currently doing just wasn't sure if it would be a good idea as would pay less interest. Just mega skint just now!

rising_from_the_ashes

Honestly, it's very rarely the best option - have a trawl through the board & you'll find loads of posts from people who've done it and ended up with the same amount on the cards .... + the loan (me included in that!)

suz_87

Ok thanks for your help!

JulieGeorgiana

I agree with Rising, although I was one of the 15%, my DH and most other people in debt from online and home are all in the 85% catagory. So I would try doing an SOA and see where you can save money to throw at your debts. Then think about a snowball calculator which will tell you which debts to focus on clearning first to save you the most interest.

Good Luck x

Tixy

Generally people are against consolidation. Thats not to say it can't work out but you have to ensure you will save money (ensure that the APRs are sufficently lower to make it worthwhile and ensure you are not actually extending the repayment term), to be certain you will be disciplined enough not to run up further debt (this is the one most people fall down on), and to ensure that you can afford the new repayments as with a loan you lose the flexibility to pay less if you have a tight month.

I would definitely suggest doing the statement of affairs calculator first to see your full financial position. You might also want to consider the option of looking to see if he could get a 0% card to move some of the debt across to. If his debt is spread across different cards and different APRs then there are ways to reduce the interest paid depending on the limits on each card etc.

garynuman

Agree with all of the above.

My lighbulb moment came when I was looking at a consolidation loan to pay off a £10,000 CC debt.

I've been with Barclays for 10+ years and the "best" they could do was a 7 year loan at 26%!! It would have ended up costing me close to £20,000 with the terms they gave me. And they explained that I wouldn't get such an "attractive" offer elsewhere! Unbelievable.

Thanks Barclays!! I now have a better understanding of my personal finances than I ever have had!

I am now a DFW (thanks to everyone on the forum ) and should be debt free in 2.5 years - God willin'!

Gaz

suz_87

Thanks for all the advice think i'll go with the trying to throw all the money we have at his credit cards (which are now confiscated and kept at my parents house! He doesn't know where they are and I don't know the PINs so no chance of spending on them!) Hopefully we can get them cleared asap. I have just found out that he appears to have payment protection on one of these cards which I plan to cancel and then try to reclaim this, apparently he didn't know it was on the card so we hopefully get some money back. Any other advice to raise some money is really appreciated!

RAS

suz

Get him (not you) to do the Statement of Affairs to which rising from the ashes linked.

There is a snowball on there but if you cant do the SAO quickly, plug all his cards into the snowball on www.whatsthecost.com and frighten yourselves silly when you see how much interest he will pay and how long it will take to pay this all off.

And please remember, it is his debt and his problem and if you keep trying to sort him out, he will never learn.,

suz_87

thanks RAS, believe me when I walked out for a fortnight he learnt his lesson!

We are getting married in summer and i want to have a fresh start I know we wont have it all gone by then but a good start would be helpful!