should I pay off my overseas credit card with a personal loan with lower interest?

budgetexpat

Hi everyone! Occasional lurker on the forums here, finally decided to register as I've had a question weighing on my mind and too embarrassed to ask my family and friends about it.

I racked up a credit card debt of AUD$6300 on an Australian credit card with an interest of 14% while I was over there(and can't stop kicking myself about it because I've never had cc debt before yet still let myself fall into the same trap as many others did).

Overall, I'm quite inexperienced with paying off debt as I've never had a mortgage or a car loan(I'm a crap driver and have a tendency to nap during journeys, so its better for the world's safety really, lol).

I do plan to go back to Australia some time next couple of years should a job offer pan out as I hope. I'm anxious about paying off the cc debt because of the high interest rate. Right now, I'm paying the minimum every month out of approximately AUD$500 I have left in my Aussie bank account, though that will soon run out and I will be sending money to it from my UK bank account.

For now, I'm working in the UK and have an emergency fund saved up of £3000. I was out of a job for 4 months last year, so I'm a bit nervous about using up the entire emergency fund to pay off the debt in case I am out of work again.

Around 2 weeks ago, I had a brain fart and applied for a personal loan from the UK bank I've been banking with for ages for £7500 at 6.2%(with a monthly payment of approximately £270 for the next 2.5 years). I had some bills totalling £3000 I needed to pay upfront and I also got a bit convinced by the ads on the bank's website. Also, in the back of my mind was the cc debt and how I could maybe use the funds from the personal loan to wipe out the debt.
FYI, I currently have £400 every month after every pay day left over after expenses are paid to put into my emergency fund and debts.

However, I'm now second-guessing myself especially with the fluctuating exchange rates! Should I wait a bit longer before I ship off £4000 to wipe out my Aussie cc debt?? Am I even doing the right thing in the first place??

Looking forward to your thoughts. Have made a lot of quite stupid personal and financial decisions the last 3 years(most of them impulsively), so I'm hoping to curb the habit and get a second or third opinion first before making the next leap!

liuhutOz

Hello from Oz! Where abouts were you living, I'm in Melbourne.

I would not normally suggest paying a credit card off with a loan as so many run the c/card back up again but in your case I think you should.
I agree about the exchange rate but we could be second guessing that for ever. What else will you do with the 'spare' 4500 that you now have. As you said, money is running low in the Oz account so after you have used that you will have to send funds to pay the card. If you have to send them monthly you will be constantly looking at the rate and having to pay to transfer the cash every time.
If you send it in one hit, its only one fee and then you can consentrate on clearing the loan.
If you dont send it, you will end up spending the 4,500 on what? and then you will have both the loan and the Aus card to clear?
Good luck
L

budgetexpat

Hi liuhutOz, thanks so much for your reply! I'm living in London now. When I was in Oz, I lived in Sydney. I really liked Melbourne a lot better though and would go over there to live if I did not have family in Sydney!

So yes, the £4500 was just sitting in my account all this time while I was fretting over what to do and driving myself nutters looking at the exchange rates every day, lol

I have now shipped off £4000 to my Australian bank account to wipe out the cc debt with. Just waiting for the transaction to go through(usually it takes 3 days with the forex site I use).

It's impossible for me to run up the Australian credit card again as it has expired and the replacement got mailed to my parents' house in Sydney, and Mum has apparently locked it in into one of her bottomless file cabinets, so now it's just too much effort to retrieve it and activate it, so that's keeping me somewhat safe from myself

I'm staycationing this summer instead of flying off anywhere for a holiday, and hoping to find other ways to wipe out the £7500 personal loan sooner rather than later!

Thanks again, and hope you are having a great time in Oz! Would love to hear more of your story and what made you decide to go there