Fallen into a Credit Card Trap - Help!

Fell_Off_The_Wagon£Saver

I don't know where it all went wrong - I used to be very careful with money but in the last couple of years - well, I haven't been. I am trying to get back on the wagon, but have fallen into a trap that I didn't see coming, that, coupled with my more recent sticking my head in the sand tendancy - means I feel well and truly stuck in a credit card debt cycle.

I used to use credit cards, even in my careful days, safe in the knowledge that I could afford the repayments and can always switch the balance to an interest free deal when the interest starts creeping up.
So having gone back to my old method of tracking every last penny of spend and debt that I have in an excel spreadsheet - I could clearly see that it was time that I took control again, stopped spending and went about applying for a 0% balance transfer card. But I was shocked to find that I was declined for 2 different applications!

Now as I have a really good credit rating, with no late payments, I couldn't understand this. I even checked my credit report, and all looked very good. The only explanation that the lady from the credit report website could give for me being declined was that I probably had too much borrowing against my name, or too much credit available to me.
So I closed down some old cards, and reduced the credit limits on exisiting ones - and am now of course focusing my all on paying off my balances, but after doing a projection for the next 6 months which involves no spend at all expect on the basics and pushing all my available salary onto the cards; the future looks grim, I'm hardly reducing the debt at all :-(

I guess my questions are;

1. How do I know when I fall below an acceptable 'outstanding debt' threshold, so that I can apply for another 0% card?

2. Are there other things I should be considering to pay off my cards - such as remortgaging to release some equity?

Outstanding credit card debt: £19K
Salary: £31K
Approx Equity in home £30K
Monthly credit card payments: £400 moving to £570 in Aug.(these are over payments, not minimum payments!)
Monthly interests on c cards: £230

As you can see with interest stacking up like that every month, I feel I am fighting a losing battle :-(

By Dec 12, my debt would at best be down to £17,300. I will have paid £3,200 to the cards but only reduced the balance by £1,900.

Aside from the absolutely massive waste of money that the interest payments equate to each month, this debt is stopping me from moving house as I so want to do - as I am sure lenders will not offer me the best deals, or any deals at all with this debt hanging over my head!

Any help or advice people can offer would be greatly appreciated.

Thanks,

CLAPTON

the word on the street is that your debt to salary ratio should be no more that 50%; so on 30k your maximum borrowing potential would be less than 15k, so new borrowing may be very difficult

maybe post on the debt free wannabe board; lots of support and advice about how to reduce spending

Dunree

Been there myself, hope it works out for you

chris-j

Presume cards all have different rates although with interest mentioned seems quite reasonable rates.
Probably stating obvious here but
try to split payments to give most to highest rate card but ensure you pay more than minimum to them all.
With existing cards look out for BT offers to move debt from higher rate cards, but if this is option make sure fees don't negate any gain.

Personally I would avoid moving onto mortgage as just lengthens debt period and if only 30k equity, not a lot of scope with current lending criteria.

Fell_Off_The_Wagon£Saver

Thanks all for your replies.

Interesting to know that the borrowing to salary ratio is around 50% - I wonder why they kept increasing my credit limit on a particular card then!

Chris-j, I only have the 2 credit cards - both have rates of between 15 and 17%, pretty standard I suppose though I cannot bring myself to consider them as reasonable! I'm concentrating the most on paying off the card with the biggest balance which has the slightly higher rate - and a couple months back I did as you suggested and used the remaining available credit on that card to transfer from the other at 0% for 13 months. So sound advice, thanks!
I'll keep looking out for promotional BT rates on that card, as they do have them quite often, and as I am clearing the balance down I'm making space to shift more from the other card when a deal does come up!

You are probably right about the remortgaging, however I am going to try the mortgage payment holiday route. I was declined for this in the last few days as apparently I am only just at the 85% LTV level required to qualify for a holiday. So I am going to pay my mortgage co £75 ( ) to revalue the property - which I know is worth more than it was 6 years ago when I bought it - which should bring my LTV rate well below 85% and then fingers crossed I will be approved for the holiday! That will free up a nice amount to throw at the credit card companies for a few months :j

I have also taken a look at the debt free wannabe board and messaged one of the debt advice people for some pointers

bigadaj

Your first line sounds a bit like the loan mis-selling claims we see on here- I know it's not but you were under no pressure to spend that money, it wasn't your own money.

The interest rates you are paying aren't too bad, I'd expect to see them in the mid twenties, mine probably are but I pay off in full so never check.

You are now managing the debt well but possibly need to be careful with credit applications as to many will flag up a problem, limiting to three every six months might be an idea for the blanche transfers, mortgage and anything else.

I wouldn't be convinced you can. Get the mortgage holiday as 2006 was near the peak for much of the uk and the house price may not have increased much since then, have you comparators in your street/area that give you some comfort?