Loans to Credit Cards?

edited 30 November -1 at 1:00AM in Loans
22 replies 5.2K views
reedireedi Forumite
65 Posts
edited 30 November -1 at 1:00AM in Loans
Hi there,

Im after some advice on what to do about my mishmash of credit cards and my car loan please.

Currently I have:
1x Texaco credit card fixed at 3.2% (I think it is?) for the life of the balance.
1x Egg card which 0% for 6 months has ran out.

and

1x Cahoot flexible loan at 8.8% for my car.

Now...because they're all over the place Im considering taking advantage of a 0% interest rate for the longest period I can find....then once it's over, transfer again and so on.

Question is I dont think I can get a high enough credit limit to cover all of the above...so is it wise to get a couple of 0% credit cards to cover them?...obviously the car has the biggest outstanding balance and Im wondering if its wise to transfer it onto a credit card instead of the personal loan company?.....will I get the same sort of payment protection?.....is there any risks Im unaware of?

As long as Im diciplined enough to keep transfering from 0% to 0% each time I should stay interest free, pay them off quicker and save some precious pennies right?

Thanks in advance

Andy ;D
Titch :)
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Replies

  • DiggingOutDiggingOut Forumite
    770 Posts
    Have to be careful, because you don't have any guarantee that 0% will continue to be available. You don't want to put it all on 0% for 6-9 months and then end up paying 18%.

    It partly depends on how quickly you can pay down the balance. If you can get it at 0% for 9 months, and at the end of that time you can have it paid down to half of what it is now, you will be ahead of your 8.8% loan even if you end up paying at 18% -- because the 8.8% will have been on the full balance at first, while the 18% will only be on half the balance.

    That said, 8.8% is not a great rate, so even if you can't get 0% 6-9 months from now, you can probably get a loan for not much worse than that, so it may be worth it.

    3.2% life of balance is a pretty good deal, I would be inclined to leave that right where it is and worry about getting rid of the other debt first.
    I have five stars! This doesn't mean that I know anything about any of the things I post. I could be a raving lunatic, or a brilliant genius, or just some guy on the internet. In fact, I could be all three at the same time.

    If anything I say makes sense, then do it. If not, don't. Don't blame me or my stars if you do something stupid because I suggested it. I'm responsible for my own stupidity only. You are responsible for yours.

    Why, I don't even have five stars anymore! Aren't you glad you aren't responsible for my stupidity?
  • reedireedi Forumite
    65 Posts
    Thanks DiggingOut....good point.....so it's wiser to get rid of 1 at a time....Egg card is the lowest....so swap that to 0% now.....or as another thought....should I pay it off with my loan for now so I have 1 less outgoing a month?....does mean my loan increases but then I could transfer over to a lesser APR loan afterwards?.....and like you say...leave the texaco one as it is.
    Titch :)
  • DiggingOutDiggingOut Forumite
    770 Posts
    How much do you have on egg, and at what APR? How much on cahoot?

    You say your cahoot loan is flexible, how flexible? If you pay extra on it, can you borrow back those extra payments later? If so, that would make a huge difference in what is best.
    I have five stars! This doesn't mean that I know anything about any of the things I post. I could be a raving lunatic, or a brilliant genius, or just some guy on the internet. In fact, I could be all three at the same time.

    If anything I say makes sense, then do it. If not, don't. Don't blame me or my stars if you do something stupid because I suggested it. I'm responsible for my own stupidity only. You are responsible for yours.

    Why, I don't even have five stars anymore! Aren't you glad you aren't responsible for my stupidity?
  • reedireedi Forumite
    65 Posts
    About 1k on Egg at 14.8% I think...and £4400 on my cahoot...at 8.8%....and yer it's flexible because I can delve into it again each time if I want!....ive worked out though I only have about 26 months left to pay this off, so is it wise to transfer onto a card loan instead and extending my payoff time?....or by transfering to a cheaper loan...because although it'll be cheaper, Ill have to do it over another 3 years and really I want to get rid of it ASAP.
    Titch :)
  • DiggingOutDiggingOut Forumite
    770 Posts
    I'd be inclined to try another 0%, put all of the egg balance and half of the cahoot loan on it. At the end of the 0%, if you can't get another one, you can always put the remaining balance back on cahoot, right? And meanwhile your cahoot balance will have been going down as well.

    If you get another 0%, depending on your balance, you may want to put all of it on the new 0% card, or just part of it again.

    By leaving some on cahoot, you keep your loan account open, so you have it to fall back on if you can't get a 0% card.

    When you get the balance low enough, it will be worth closing out the loan for 0% cards because the balance will be so low that a higher rate of interest won't matter that much. But for now, you want to keep the option of putting it all back on the loan.
    I have five stars! This doesn't mean that I know anything about any of the things I post. I could be a raving lunatic, or a brilliant genius, or just some guy on the internet. In fact, I could be all three at the same time.

    If anything I say makes sense, then do it. If not, don't. Don't blame me or my stars if you do something stupid because I suggested it. I'm responsible for my own stupidity only. You are responsible for yours.

    Why, I don't even have five stars anymore! Aren't you glad you aren't responsible for my stupidity?
  • reedireedi Forumite
    65 Posts
    Aha!...I see....good idea!....could I use Egg again by paying off my egg card with cahoot....then transfering the balance back onto the card again to take advantage of their 0% until Jan 2005?....or is it for new customers only?....save me applying for a new card again.
    Titch :)
  • DiggingOutDiggingOut Forumite
    770 Posts
    Not sure exactly on egg. I'm pretty sure it is new customers only, but some egg cards have a 0% anniversary offer. Might ask that on the credit card board.
    I have five stars! This doesn't mean that I know anything about any of the things I post. I could be a raving lunatic, or a brilliant genius, or just some guy on the internet. In fact, I could be all three at the same time.

    If anything I say makes sense, then do it. If not, don't. Don't blame me or my stars if you do something stupid because I suggested it. I'm responsible for my own stupidity only. You are responsible for yours.

    Why, I don't even have five stars anymore! Aren't you glad you aren't responsible for my stupidity?
  • reedireedi Forumite
    65 Posts
    Thanks Digging Out....appreciate the advice!
    Titch :)
  • acheekymunkyacheekymunky Forumite
    104 Posts
    Desperate for a bit of free financial advice and assumed this would be the best place to come!

    so here it is........in 12 months time i will be moving to america for a couple of months. i would greatly like to be clear of debt and not have to worry about minimum monthly payments while i am there.

    Since i was 18 i have accumulate store cards, one stands at £480 and another at £165 the apr is around 26% on these.

    I have a Barclay card which i have maxed at £500 at 17.9%
    An Egg card which i had a store card balance transfered, maxed at £500 0% until Oct 2004 then 13%

    I have 2 overdrafts - one for £1250 and another at £1000 but these are Student accounts and interest free for another 3 years.

    I thought the best solution would be to get a £2500 loan to cover the £610 store cards, £1000 in credit cards and use the rest to clear other niggley debts such as to friends and family and a years min pmt on mobile phone. £2500 would suit me fine and i would be able to pay £210 each month for the next 12 months. The problem is no-one will give me a loan because i am a student!

    Any advice?? a problem shared certainly is a problem halved!!
    Making the most of what I've got.
    I have now realised earning more money won't make me richer but clearing my debts will!!
  • Tim_LTim_L Forumite
    3.8K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    ✭✭✭✭
    acheekymunky: In fact replacing credit card debt with a loan (i.e. another debt) is probably a problem doubled, not halved. You have to sort out the underlying spending problems, because otherwise you'll just end up maxing out your cards again. The BIG danger here is that you're planting the seeds of a really massive problem a few years down the line, so you should be thankful you have a chance to sort it out now.

    By my reckoning, on the debts you currently admit to, you have about £5000 outstanding, which you've built up over a few years - carry on like this for a few more years and you'll have 10K of debt. Unless you act to reduce this immediately while you still have the advantage of 0% on the overdrafts and so on, it will increase rapidly and become a dreadful burden around your neck in a few years time.

    You only have to read other people's stories on this board to see what you are heading towards - perpetual stress, inability to control any aspect of your life, impossibility of buying a house, relationship difficulties, poverty in retirement etc etc etc.

    Bear in mind too that spending an extended period in the US, although cheaper than here, is going to be expensive for you unless you're working and have something available for accomodation.

    You need to look carefully at your spending, and figure out what is genuinely essential (e.g. food and lodging) and what is luxury (e.g. mobile phone - honestly, you can get by in life without one of these). Make a budget, and stick to it, and be absolutely ruthless about what is essential and what isn't. A lot of unnecessary spending comes from habit and peer pressure - figure out what you actually need to spend to stay alive, and ditch as much of the rest as possible, putting the savings towards clearing debt with the highest interest rate debts first.

    26% is a silly interest rate to be paying on anything, even though the amounts aren't huge. See if you can get a decent alternative lifetime of balance transfer deal (probably not a 0% deal with your history) and switch the debt to these. Then destroy the store cards.
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