Credit Card or Loan

Mizz_Pink

Hi,

Ive got debt of £2411 split over 2 cards, the Mint is now charging me interest.
Ive just applied to Egg (had an Egg card before) and got turned down.

I'm getting a bit tired of keep switching cards to 0% and am thinking of getting a bank loan. I know the % will be higher. That way I will have no cards to spend on, the £60 I spend here and there just means its taking longer to pay off. I'm quite happy to have a direct debit and get it paid off sooner than keep trying top put it on cards, I think i have had most on the market! Egg, Barclaycard, Mint, Virgin, HSBC, Sainsburys, M&S.

Ive had no late payments or missed payments so my credit score should be quite good.

What do you all think ?

:beer:

Barclays are quoting 9.9% APR £2,500 over 18 months is £149.68

Welshlassie

You need to ask yourself why you are spending on these cards at all. How long do you have left on the 0%, can you transfer the balance of one to the other with the longer 0% and then pay off as much as you can each month. When you have opened the other cards and finished with the 0% do you close them or are they still effectively open, but you dont have the cards as this may be the reason you were turned down as Egg saw you have credit available but not used.
In the long run it wouldn't be wise to take a loan out until you have identified why you need to put £60 here and there onto the cards. If you have a budget in place and stick to it, you shouldn't ever have a need for spending on Credit Cards at all (except maybe to buy stuff on the internet, just pay off in full each month)

Mizz_Pink

Hi,

I always cancel the cards when they balance has been transfered. The temptation wont be there if I dont have any cards, I dont spend a lot on them but £50 here and there mounts up, this goes on xmas presents, like 2 years ago i bought a nice present for my Mum at xmas cos she had an operation and came home xmas eve, I wanted to get her something nice. Also we got married last year and I spent about 1k on things that we had to buy, not so much in comparison to the 10k my parents spent.

If i have a loan I will have no cards, no temptation, and no hassle of keep applying for 0% cards.

Egg and Barclaycard Loan have quoted 13.8 and 14% on their loans as recommended by this site so I know 9.9% isnt so good but 4 years ago I transfered 3k onto an Egg card and i'm still 2.5k in debt. So I know that this debt wont be paid off in 18months unless I get a loan.

tesuhoha

Why dont you apply for a life of balance card which stays at the same low rate until you have paid off the debt. Just to sure to cut up the card when you get it so that you dont use it and treat it like a loan. That would be better than a loan because a) the interest rate will be lower and b) if you ever have any extra money then you will be able to pay it off quicker whereas with a loan you probably wouldnt do that. If you are able to take out a loan, then you are also able to get a low rate card, cut it up and not touch it. Just be strong, you can do it; you know you can.

Mizz_Pink

tesuhoha wrote: »

Why dont you apply for a life of balance card which stays at the same low rate until you have paid off the debt. Just to sure to cut up the card when you get it so that you dont use it and treat it like a loan. That would be better than a loan because a) the interest rate will be lower and b) if you ever have any extra money then you will be able to pay it off quicker whereas with a loan you probably wouldnt do that. If you are able to take out a loan, then you are also able to get a low rate card, cut it up and not touch it. Just be strong, you can do it; you know you can.

Ive been knocked back for an Egg card, Ive already been approved a loan with Barclays which is who I bank with. I dont want keep applying and get turned down cos that will affect my credit rating.
The interest on this loan will be £250. I wouldnt of got a loan if I owed a larger amount cos then the interest you pay is higher but the thought of being debt free in 18 months is what is enticing me.

tiff

You seem like you have your mind made up, but I would have (and did) transferred it to the M&S life of balance transfer, I think thats 4.9% now? The difference in interest is a lot.

tesuhoha

I know loans are very tempting because you feel as if your problem is taken care of. I dont think that a loan is a bad thing if you stick to paying off your debts and dont feel suddenly rich and start spending again. £250 is not that bad I suppose and maybe you can save up some money to pay it off a little earlier. However, we have a car loan and I always tackle other debts before the loan as I know it will be paid off in December come what may.

tesuhoha

I do agree with tiff though

Mizz_Pink

Ive applied and it was done in 2 mins. The rate is 9.59% the amount of interest paying back is £194.24.

tesuhoha

Surely it wouldnt hurt to have one more teeny weeny application for a low balance card. We've got about 10 cards on the go. You just have to close them down and your credit rate recovers. I think its the amount of credit available to you at one time that affects your rate but just because youve been turned down for one card, doesnt mean youll be turned down for another. Dont want to lead you into bad ways but just want to save you some money. I dont think its all about your credit rating when you apply for cards either, I think they look at how much you earn, but that probably affects your credit rating more than anything else, otherwise why can some people get loads of credit, (like us) and others not.