Reducing Interest Rates on Credit Cards

thunderkid1234

Ok so this one may be interesting to some people, In 2005 i decided to do an extension on the house i took a 2nd mortgage and decided to use my credit cards to decorate in the view that i would pay them off quite quickly and not prolong interest on a higher 2nd mortgage.

I had never missed a payment and was very rarely late with them either. In short come the economic doom of 2008 all my cards upped the interest rates to almost double where they are now, I have no problem making payments, and the debt now stands me in at around 50k (it was 90k when i had this bright idea) over 7 cards 4 of which have been cancelled as i refused any more interest rate hikes on them.

Im now of the view that these companies have taken more than enough money from me over the last four years and wondered what best cause of action i should take in trying to get the rates reduced. I have taken PPI claims against most of them which when taken out i was self employed and shouldnt have qualified for PPI at the time anyway, I almost feel if all my claims are upheld (there are 10 of them) im going to be in for a huge windfall which will probably eliminate most of the debt anyway.

Ignoring the PPI claims, What i'm trying to do is reduce the debt substantially over the next 12 months, at the current rate of repayment it will take me 4-5 years, i'd like to try and do it in 2 and getting the interest rate down has to be the key.

Any advice would be appreciated

[Deleted User]

You could ask, but it's unlikely they will reduce them without putting you on an arrangement, which would hurt your credit file.

The fact that your debt is still so high shows why they view you as a higher risk. Well done on closing the accounts to reject the increases though. and I'm sure the PPI claim will help.

Ben8282

£50,000 on high interest credit cards. What is your total monthly minimum payment?

Assuming that your income is sufficiently high to be able to make this payment plus the payments on your two mortgages without causing you financial stress, and you can demonstrate this, would suggest applying for a loan. which may well have to be secured as a 3rd charge on the property in view of the amount and assuming equity exists to cover the loan.

Continuing to pay on high interest cards will get you nowhere as I'm sure almost all of your very high monthly payments are going on interest, although you do say 'at the current rate of repayment it will take me 4-5 years' which would imply that you are actually paying a lot more than the minimum payments, perhaps as much as £1000 over minimum each month if not more.

Taking your OP at face value, I guess you are making well over £2000pm in credit card repayments in addition to day to day spending, houselhold bills, mortgage payments and everything else without getting further into debt. If your income and credit history reflect this, go and talk to your bank or mortgage providers and see if they can do anything to assist here.

thunderkid1234

Ben

My payments equate to clearing over £1000 off the debt every month, naturally as the debt decreases and i maintain my current payments, the debt will decrease quicker,
Thankfully i am well payed so dont miss the money i pay off on the credit cards so much, i still live a comfortable lifestyle and dont struggle to make ends meet, so applying for a consolidation loan or another morgage isnt really an option i want to take, its almost robbing peter to pay paul, although i appreciate the interest will be a lot lower.

Also because of the high level of credit, it doesnt bode well for my credit score regardless of the fact i have no problem making the payments on time so applying for loans could make my fair credit score into a poor one

Tixy

If you can meet your repayments and don't want to consider a loan what advice were you after?

You can certainly call your credit card companies and ask if they can reduce you interest rate whilst you maintain the payments. They do occasionally say yes and knock a couple of % off.

Alternatively if you have any 'space' on the 3 cards that are not closed you could see if any of those would be willing to offer you a promotional 0% balance transfer to consider switching some of your other debt to and so reduce the interest you paid.

If you have any cards that are totally clear and still open, from the £40k you have paid off, then again it can be worth asking if they'll offer you any promotional balance transfers.

Aside from attempting those I guess you just need to carry on paying off as much as you can afford until you hopefully receive some money from PPI claims.

jonesMUFCforever

IMO a remortgage is the only way to go unless OP wants to hurt his credit rating.