Stuck in a vicious credit card circle!

Fay_elizabeth

Hi All,

First of all, love this forum lots of excellent advice floating about.

I need a bit of advice. I moved house in February from the countryside to central London, which obviously cost a lot of money. I had £2000 of savings before I moved and when most of that was gone after the lettings agency fees, damage deposit, advance rent and furniture for the new place I resorted to credit cards. Here is my tally:

Barclaycard initial: £1250 / £1300
Capital one: £274 / £300
Aqua: £600 / £1000
Vanquis: £220 / £250

So as you can see, all the usual suspects of a bad credit history. My credit rating is actually getting better (I've been working on it) but I don't earn very much (About £15000 a year) and I seem to be stuck in a spiral of paying my rent then paying bits off all my credit cards and then having nothing left at the end of the month.

So my question is, is there any way to consolidate this, perhaps lump it all together? Bearing in mind my credit history is questionable.

Thank you in advance for any responses. :A

heathcote123

Fay_elizabeth wrote: »

Hi All,

First of all, love this forum lots of excellent advice floating about.

I need a bit of advice. I moved house in February from the countryside to central London, which obviously cost a lot of money. I had £2000 of savings before I moved and when most of that was gone after the lettings agency fees, damage deposit, advance rent and furniture for the new place I resorted to credit cards. Here is my tally:

Barclaycard initial: £1250 / £1300
Capital one: £274 / £300
Aqua: £600 / £1000
Vanquis: £220 / £250

So as you can see, all the usual suspects of a bad credit history. My credit rating is actually getting better (I've been working on it) but I don't earn very much (About £15000 a year) and I seem to be stuck in a spiral of paying my rent then paying bits off all my credit cards and then having nothing left at the end of the month.

So my question is, is there any way to consolidate this, perhaps lump it all together? Bearing in mind my credit history is questionable.

Thank you in advance for any responses. :A

Simply invent a time travel machine, go back to february, come back and post a new thread asking if its a good idea to move to central london for a 15k wage.

Edit. No seriously, I guess I should say something constructive. Earn more money. It's London, there's plenty about.

jason1231972

Fay_elizabeth wrote: »

Hi All,

First of all, love this forum lots of excellent advice floating about.

I need a bit of advice. I moved house in February from the countryside to central London, which obviously cost a lot of money. I had £2000 of savings before I moved and when most of that was gone after the lettings agency fees, damage deposit, advance rent and furniture for the new place I resorted to credit cards. Here is my tally:

Barclaycard initial: £1250 / £1300
Capital one: £274 / £300
Aqua: £600 / £1000
Vanquis: £220 / £250

So as you can see, all the usual suspects of a bad credit history. My credit rating is actually getting better (I've been working on it) but I don't earn very much (About £15000 a year) and I seem to be stuck in a spiral of paying my rent then paying bits off all my credit cards and then having nothing left at the end of the month.

So my question is, is there any way to consolidate this, perhaps lump it all together? Bearing in mind my credit history is questionable.

Thank you in advance for any responses. :A

Are you actually bothered about being able to qualify for credit in the next 6+ months or so? Only reason I ask is because with a debt of under £2500, you 'might as well' have a look and see if you can get a 0%/low balance transfer for some or all of that credit card debt. Too many credit searches in a short period of time can set you back in qualifying for further credit (it's a bit of a catch-22), but if you have no 'essential' credit plans on the horizon, go for it!

Failing that, there's the tried and tested method of snowballing...throwing the most money (more than the minimum payment) at the smallest debt first (whilst always keeping up with minimum payments on other cards!), then moving onto the second-smallest debt, and so on.

I estimate that your minimum monthly payment costs probably come in somewhere between £70-80 per month. How much can you actually afford to pay? If you have a figure in mind (and ideally if you know your individual CC APR rates), it's possible to calculate a pretty accurate date in the not-too-distant future, when you'd be rid of all this debt

Fay_elizabeth

Thank you for a good constructive answer Jason1231972. I did actually apply for a 0% card a while back and I was rejected so I'd be a little afraid of tarnishing my credit record further. However I like the idea of the snowballing, I think that might be the best way forward. I can afford to pay around £200 a month in repayments if I'm careful, so if I just put most of that on the Vanquis card first of all I'd be halfway there.

heathcote123, frankly ridiculous response.

bouncydog1

Whilst paying off the smallest debt first is inspiring, best way to snowball is to pay most of the highest interest rate card and pay minimum on the others. Suggest it might help you to post over on the debt free board - the people over there will give you great ideas to cut costs etc.

redpete

jason1231972 wrote: »

Failing that, there's the tried and tested method of snowballing...throwing the most money (more than the minimum payment) at the smallest debt first (whilst always keeping up with minimum payments on other cards!), then moving onto the second-smallest debt, and so on.

That's one method of snowballing and might help if you need the psychological boost of reducing the number of debts as quickly as possible. A more effective way of reducing the amount of debt as quickly as possible is to pay the minimum amount against all cards with any surplus against the most expensive rather than the smallest - i.e. the one with the largest APR.

YorkshireBoy

redpete wrote: »

That's one method of snowballing and might help if you need the psychological boost of reducing the number of debts as quickly as possible. A more effective way of reducing the amount of debt as quickly as possible is to pay the minimum amount against all cards with any surplus against the most expensive rather than the smallest - i.e. the one with the largest APR.

However, because the OP is maxed out on all but 1 of their cards, there's also an argument for paying the same off each of these 3 cards - no matter what their APR is - to get the individual utlisation ratios down.

Certainly doesn't present a good picture to anyone searching their file for credit-providing putposes.

redpete

YorkshireBoy wrote: »

However, because the OP is maxed out on all but 1 of their cards, there's also an argument for paying the same off each of these 3 cards - no matter what their APR is - to get the individual utlisation ratios down.

Certainly doesn't present a good picture to anyone searching their file for credit-providing putposes.

If the OP was looking for a way to improve their chances of getting more credit you might be right (I don't know the details of the criteria different lenders use).

However, the main concern expressed by the OP is to reduce the burden of CC repayments. As the OP is managing to make the minimum repayments and has a small amount left over I don't like the option of getting more credit to reduce the monthly repayments - best (IMO) to juggle the payments to reduce the debt quicker rather than worry about short-term credit scoring.

jason1231972

redpete wrote: »

That's one method of snowballing and might help if you need the psychological boost of reducing the number of debts as quickly as possible. A more effective way of reducing the amount of debt as quickly as possible is to pay the minimum amount against all cards with any surplus against the most expensive rather than the smallest - i.e. the one with the largest APR.

Very true, however I suggested the smallest debt first for a particular reason. The OP has 4 subprime CCs (assuming the Capital One is their 'Classic' card), with typical APRs of:

1) Barclaycard Initial - 29.9% - biggest debt
2) Aqua - 32.9% - second biggest debt
3) Capital One - 34.94% - third biggest debt
4) Vanquis - 39.9% - forth biggest debt

So, roughly speaking (and assuming that her APRs are 'typical'), the OP would achieve much the same outcome whether she paid the smallest debt first, or the biggest in interest, as they're broadly one and the same. Small difference between the Capital One and the Aqua, but it's neither here nor there

Whatever the exact case, we can probably assume that the Vanquis is the highest interest, and the Barclaycard is the lowest.

In any case, OP, assuming an average interest rate of 40% (for the sake of caution), you can clear all of this debt within two years, if you do pay £200 per month.

heathcote123

Fay_elizabeth wrote: »

heathcote123, frankly ridiculous response.

No really it wasn't. 15k for central london is just silly. Your boss probably pays more than that for his parking space.

Stop looking at how to spend less and figure out how to earn more. Thats why you are in this situation, and it's only going to get worse.

keeleyjadex

I don't really think it's fair that people are slating her for moving to London on 15k - that's her decision and not what the question was about.

Anyway, I think snowballing will be your best bet. Make cuts, even if you think they won't make a difference. Eat breakfast a home, take a flask of coffee/tea with you to work if you tend to stop to get some. Make a packed lunch. Now I don't drink tea or coffee but just making a packed lunch alone has saved me about £10-£15 extra per week.

Save all your 1p, 2p, 5p, 20p and 50p's to start with. Put them in a jar and put as much in there as you can. Then move on to putting in £1's and £2's. Me and my boyfriend have been doing this for about 4 months and have over £100 now! You'll be surprised how quickly it all adds up.

I don't know how you work your wages, but when I get paid, I work out all my outgoings. I then draw whatever is left out of the bank. I give myself £90 a week to live on to cover petrol, going out, buying new things etc, which runs Friday to Friday. The rest is put in a savings tin. I work a lot better with cash as I can physically see how much I have. If I can't afford something with one weeks money, then I have to wait til next week, or a week that I can afford it. It keeps me in total control of my money.

Good luck with it and always remember that you're in control. The debt on the cards is all manageable so don't get yourself too worried about it. Just think about it properly, live on a very small budget each month and get it cleared as quickly as possible!