Consolidation Advice Needed For Newbie

HP550

Hi, Posted this in the loans section but a few of the guys advised me to try it here.

I am looking to consolidate a few credit card balances into a personal loan in order to a) combat their constant raising of rates to crazy level and b) to see some light at the end of the tunnel.

Current status. Both myself and my wife are employed with a joint income of £40,000. (income can be verified via wage slips). Savings approx £3k.

Credit card balances circa £20k. Currently paying the minimum each month.

Other credit - car loan - 49 months into a 60 month agreement. Balance circa £2,900. Monthly payment £260 per month

Our credit rating should be very good as everything is always paid on time, never missed a payment anywhere.

Home owner (mortgaged with circa £30k equity).

Question is what is the best way to approach this?

I am wary of approaching my own bank as they refused me a zero % credit card to transfer a balance around a year ago. I believe this would have a negative impact on my credit file. Since then my wife has returned to work earning £15k. Should I be wary? How much influence does a history with your bank (nothing negative) have in the decision making process or is your chances of acceptance as likely by moving lender?

I would guess an unsecured loan would be the best way. Any pointers on who the best lenders are out there for my circumstances?

Current credit card payments are circa £550 to £600 per month so I would be looking to use as much of this to put toward a loan. (eg £20k over 4 years with Halifax at 15.4% is a touch over £550 per month).

The above is a heavy loan but 4 years then clear would be far better than what seems a lifetime on the credit card repayments. Is this the type of thing I should be looking at?

Any advice is greatly appreciated. Need to get this monkey off my back

D

neverbefore2011

I would recommend cancelling your minimum payments direct debits, and replace them with standing orders for at least as much as the current minima, and preferably more

Then contact your credit card lenders and reduce your credit limits so that you cannot use the cards any more

15.4% seems high for a personal loan, but I am probably out-of-date - consider using your 30k equity for a cheaper secured loan (if such a thing is still available!)

And look for flexibility - the one advantage of credit card debt is that you can overpay to your heart's content, and receive a monthly printed confirmation of the reduction in your debt

Above all, stop using credit

HP550

3 cards make up the total balance. 1 of them I have froze stopping a rate jacking, the second and one with 65% of the overall debt has just been subjected to a proposed rate rise to 29%:eek:. I spoke to them tonight about taking a pers loan to cover the entire balance. I am hopeful they will look favourably on taking the loan to clear cc balance and cancel account. That way it would not increase my borrowings to earnings ratio (which is way too high already). If no joy with loan I will freeze the rate on this one.

The card which I will use very occasionally now has a zero% offer so I may consider transferring some of the "frozen" balance and upping payments if I can free some cash up.

Frustrating as I accept the debt, I have the income to service it and the will to get it cleared. I just need the right deal to allow me to set the wheels in motion.

neverbefore2011

in my very limited experience, credit card companies are as open to propositions as phone companies and energy suppliers etc - tell them to stuff their 29.4% or you'll go elsewhere, but f'chrissake stop using those cards

pwuk

Hi

I suggest that you pop into branch and ask a banker to review your account to check if you qualify for a loan. If you bank with Halifax they should be able to advise immediately.

Several things will factor, your account conduct, CRA data and internal lending score. They can let you know if any loan products are available and this will give you an indication as to whether you should apply. It goes against the grain but I would suggest that your logic to settle CCs is sound provided that you close those accounts once you settle them in full.

DO NOT under any circumstances reduce your credit limits as above, lenders will see several accounts with low limits and question the reason as to why. Such action WILL impact your ability to obtain further credit.

Lots more to add but using a tablet to type this.

Good luck.

mrsb83_2

HP550 wrote: »

Frustrating as I accept the debt, I have the income to service it and the will to get it cleared. I just need the right deal to allow me to set the wheels in motion.

You really don't.

Decline the rate increase. You won't be able to use the card any more but you need to stop using CCs anyway.

With your level of debt and income you should be able to tackle this without resorting to further borrowing. Consolidation loans are hard to come by nowadays, anyway, but you need to realise that you've been overspending and reduce your outgoings else you'll find yourself in the same position down the road.

Look at the figures in my signature. I've been there, with a similar income, and I will have cleared everything by October.

A loan really isn't the way out. It is in no way a solution - it just moves money around, and the hard part is paying it back, not having to deal with more than one company.