Credit card debt strategy - overdrafts? Consolidated loans?

jenntomo

My husband and I have just finished our PhDs and (as international students) have accumulated a lot of debt, both in terms of government loans and credit cards. As the credit cards take priority due to the high interest rates, we're unsure as to the best method for paying them back. The problem is that due to the high amount of debt we owe each month we haven't been able to pay off more than £10-15 above the interest, meaning we'll be paying these off forever.

Unfortunately we applied, but were rejected for, a 0% balance transfer credit card. Another option presented to us was a consolidated debt loan from Barclay's where they pay all of our cards and then we'd owe them money each month. I'm quite suspicious when banks offer loans of this kind, but does anyone think it might be a good idea?

Another option my husband proposed was to use our £1100 overdraft limit to pay off some of the cards. I personally don't like using debt to pay for debt, but he said that the overdraft is interest free and we could take big chunk out of the 2 cards.

Embarrassingly we have 2 credit cards each owing about £1700 so want to get this sorted right away. Any advice would be most appreciated!!!

Pipz

You'd have to compare the relative APR's on the loan vs the CCs, if the loan APR is lower then I see the 'consolidation' strategy as suitable in light of you being unable to get a 0% BT card.

I haven't experience of the overdraft proposal just check that the 0% interest isn't offset by high fee's for using the service.

Debt isn't be embarrassing, however not dealing with it is. You're taking steps to address it so that's positive.

Other members have a wealth of experience and I'm sure they'll post up in due course

garynuman

Just for info.

I had £16000 debt and was offered a £10000 Barclays loan to consolidate. They weren't prepared to offer the maximum.

This was to be in the form of a £10000 loan over 7 years! Can't remember the APRs but I recall working out that I would be paying back just about £20000! :eek: The monthly payments were around £270. Barclays said that as they were my bank that "this is the best deal I would get anywhere"!

This is when I realised that consolidation wasn't for me!

I think you should look at snowballing your CCs. Overpaying won't be easy with little/no income (you haven't mentioned your current employment status) but you may be offered 0% once one of your cards has been paid off.

There's a lot of encouragement on the DFW board. I wish you both the best of luck. Congrats on your PhD's by the way!

Gaz