Making a start with CC debt, advice appreciated

silicontempest

Hi,

My credit debt is as below:

First Direct £500 21.9%
Amex: £3000 24.9%
Barclaycard: £6000 29.9%
Natwest: £3000 29.95%
MBNA: £3000 34.95

As you can see the interest rates are getting pretty phenomenal.

American Express have already phoned me to offer to reduce my interest but freeze my use of the card - it was this that spurred me into taking action. Should I ring the others and ask for the same? What should I say? Can you offer me a better deal? Can you freeze and then reduce?

I don't really want to take out another card and start shuffling, but I could entertain it if someone could help me with the math. I've just signed up and am still reading through all the advice stickies, I'm just a bit lost from jumping from article to article.

I did consider taking out a loan for 15k and then cancelling the cards - is that asking for trouble? (Assuming I could get one).

elantan

are you currently snowballing your payments? what do you think the chances are of you getting a new card ? preferably 0% ? will someone touch you for a loan? can you afford your repayments ?

sorry lots of questions

silicontempest

I'm making minimum payments, but I'm starting to struggle financially. There's barely enough money left after bills to pay for food, and if we get a "bad" month, i.e. the car tax is due, then it's a lot of worry. I can't afford to put extra on the cards, I need to save money to afford to eat, then I can start trying to pay them off.

I've got good credit, I reckon I could get another card or a loan approval. My worry would be getting a low enough interest rate once approved, although anything is better than the MBNA one right now.

mi_jardin

I would go with Amex's offer personally.
I know this goes against the snowball calculator, but if there is any chance of getting a 0% BT on the £500 card when it is paid off then I would pay that one off first and then move some off the highest APR card and repeat. The sooner you can get the APRs down the sooner you can pay more off the balance instead of just paying the interest.
Thats what I did, but other more informed people will be along to help you I am sure.

[Deleted User]

You're probably going to struggle to get a card or loan with a decent offer, with that kind of debt. mi hardin makes a good suggestion, but I don't think First Direct give much in the way of BT offer.

However, if you're going to be paying this off for a while yet, have you considered BTing your MBNA balance to the FD one? There's an annual saving of 13% to be had there.

elantan

silicontempest wrote: »

I'm making minimum payments, but I'm starting to struggle financially. There's barely enough money left after bills to pay for food, and if we get a "bad" month, i.e. the car tax is due, then it's a lot of worry. I can't afford to put extra on the cards, I need to save money to afford to eat, then I can start trying to pay them off.

I've got good credit, I reckon I could get another card or a loan approval. My worry would be getting a low enough interest rate once approved, although anything is better than the MBNA one right now.

yeah it is a really high interest rate ... i would try and transfer if you can ... but can i also suggest that you try the dfw board and maybe make a plan to get back in control of your money ( i may be wrong and apologies if i am) but it seems given that that you are struggling and a simple thing like car tax can tip you over maybe you would be better off trying to get it all sorted for the future

try the dfw board they are good at helping people cut back , also try the os board and groceries board ... if you stick with it you should find a huge difference in your money problems within a short space of time ... it's about making the money you have work smarter for you ... and trying to get more

good luck

malcolmffc

What did you spend all this money on? Is there anything you can sell to pay them off?

glawster_2

Let's start with the maths, you are currently paying £4597.50 a year in interest (or £383.12 a month) given the figures above. You don't say your income but for most people I would guess this is a lot.

Why the high interest rates, are these cash advances or is it the interest rates you were offered? If the latter then it may be difficult to get the best deals on the market.

Are the cards maxed out? If you are not near your credit limits you could balance transfer between the cards. For example balance if barclaycard has a £7000 limit transfer £3000 from the MBMA card onto your barclaycard at 6.9% (plus around a 3% fee) would reduce interest charges on this balance to £207 a year (not including the fee of 3% - £90) from £1048.50. Your MBNA card is then clear so if their BT rate is good you then BT the AMEX/Natwest onto MBNA. You could also apply for an credit limit increase on the cards so you can shift between them. It's likely that this is the easiest credit available to you, assuming you haven't had an increase in the last 6 months on the cards in question.

It might be hard to get over £15000 of credit on new credit cards, if you can then great get a couple of 0% cards and balance transfer.

So your next option would be a loan Moneysupermarket can show the the best rates, I had a look, and 7.8% is available with Derbyshire through moneysupermarket, but again you'd need to pass their credit checks and not everyone gets offered the lowest rates. This would reduce your interest to £1209 a year, saving you £3388.50 a year from what you are currently paying. Can be worth looking at Zopa too.

If that fails then certainly talk to the banks concerned and see how they can help. Other options are IVAs and/or bankrupcy but research the implications fully if you need to go down this road. Keep in mind that freezing and reducing will impact your credit rating as it's recorded as a default.

Good luck

Paul_the_Painter

I'll second what glawster said

What are your credit limits on the accounts?

My addition to make this post worthwhile, is to say that if you are the shy type, and don't like to phone up to ask about balance transfers, try getting online account management. Most CCard companies show the offers you have available online when you log in to your account.

jamesd

Some things to do:

1. Take the Amex offer.
2. Use the First Direct card for normal spending if you have credit limit available. When you spend on it, make an extra payment of the same amount to the MBNA card. This way of shifting money is cheaper than a balance transfer if you can shift the money fairly quickly. If it'll take longer than a couple of months a balance transfer is cheaper. If not FD, one of the others that is still cheaper than MBNA.
3. Phone each of the card companies and say. "I'm looking to reduce interest rates and move balances to the cheapest of the cards I have. As part of this, what lower rate or balance transfer deals can you offer me so I can consider them against the others I'm being offered?" If they ask about the other rates say that they are the first you're calling, so you don't have the others yet.
4. Don't ask about freezing. That's done mainly when they think that someone is in trouble and want to get rid of them as a customer. You're looking for deals offered to people they want to keep.

It's completely routine for people to call up asking for rates and balance transfer offers, no need to wonder about it being odd for them to get such questions.

silicontempest

Thanks for the advice guys.

The cards are pretty much maxed, there's maybe a couple of hundred free on the really big ones, purely from what I've started paying off.

I'm currently going through and reading everything I can on the DFW boards, I've found two old loands with PPI on that I'm looking at, and I'm trying to get an action plan together. Will be calling the credit card companies this weekend.

x