Help!!!!! Advice needed Urgently!!!!

xSmithx

I am totally rubbish with money saving or being savvy hence why after some really rubbish times I am not in the best of health financially.

Now what my question is Barclaycard have offered me the option to move up to 90% of my credit card limit as a cash payment into my current account at the rate of 6.9% for three years.

I currently have 2xOD and 1CC amounting to 4k, I believe my credit rating has taken a bit of a nose dive in recent times so I wouldn't be able to get a consolidation loan elsewhere.

If I had a loan of 6.9% for three years I'd be looking at around 130 a month to clear it in that time.
The credit card isn't going to work in the same way is it? I'm mathematically dense, so how would the figures stack up and is it worth it?

What is the best/cheapest way to pay all that off???

Thank you for any help!!!!

bigadaj

Consolidation loans are rarely good as people just seem to run them up again.

What are you currently paying on your overdraft and cards, if more than the rate offered then it might be a good idea to balance transfer at the offered rate, check if there is a fee as well.

If you do then you need to pay as much as you can as quickly as you can, there is the risk that not paying down will result in. Interest on interest. Also at the beginning you need to ensure you ay the debt down as if you go over the limit then you will be charged and more importantly lose the low rate and be back on 20% plus.

xSmithx

Heya.

My limit is 6500 so I wouldn't go over and it's 14.9% at the end of it.
I need to work out how much minimum payments etc would be?
Currently I pay nothing off any them really.
There is no fee or anything to have the cash sent to my acc.
My credit card is going down by £25 a month and that's 0% til June. Currently 1,200 balance.
My 1xOD is working out at 9.00 interest per month currently it's 800 OD.
My other OD charge is 9.00 per month interest and OD usage fee. It's at like 2000. I'm currently always living it, when my wages get paid in, I'm still minus so I feel that I am never really getting anywhere and would at least like to pay that off so I'm on a bit more of an even keel and its easier to work it all off then!

I just don't know what the better options would be!

bigadaj

If you have the discipline then moving it would make sense, however you're currently not making much of a dent in it, so that doesn't install confidence in you being disciplined enough to continue payments at a suitable level.

Whatever you do you will need to ensure you make payments at a high level to get out of debt, if you can and do make payments at say £150 per month then the barclaycard looks like a good option, but make sure you don't run up other Cards or overdrafts or you'll be worse off than you are now.

xSmithx

Ideally I'd like to pay £150 a month to it, have it come out as a SO next day after pay day, so it would be gone before I miss it and hide all my cards away so I can't use them unless a dire emergency occurs!!
Thank you!

I think what my main question really is, is it more expensive to take it out on a credit card as opposed to the loan. Or if I pay say 150 a month for the 3 years would it work out the same would it be the same overall I interest wise? I am being so dense with this, probably as I'm in a panic!

Thank you!

bigadaj

All you need to do is compare the rates, the rate you are being offered is less so the transfer will be good for you. The od charges are also probably flat rate so that is even more of a saving.

Good idea to set up a standing order, and with a target of beating say 3 yeast to pay it off it might encourage you to sweep up whatever you have at the end of the month and pay that in as well.

Good luck.

pqrdef

You owe £4000 and you're reducing it by £25 a month. At that rate it'll take 13 years to clear, so basically never.

Admittedly it's not costing you much at present, though it's got the potential to become a millstone.

The only way to get rid of it in a foreseeable timescale is to throw a lot more money at it.

To pay it off in 3 years using the credit card offer would cost about the same per month as the personal loan route. Well £4000 in 36 months is £110 a month in capital, even at 0% interest.

Of course the minimum payment on the CC will be a lot less than that. But if you keep being tempted to make the minimum payment, you won't make any progress. Perhaps even less than now. A loan can be more effective for self-discipline.

6.9% interest on £4000 is £23 a month, which is more than you're paying now. That's because your wages are set against your overdraft every month, which makes it a cheap way to borrow. If you can get another 0% BT card, probably give the 6.9% a miss. It's not a world-beating offer, especially as it's only 3 years, not life-of-balance.

jo-bo

With barclaycard you have the option of paying a DD of set amount per month as long as its above the minimum payment. This would be preferable to setting up a SO as you would be covered the DD guarantee.

YorkshireBoy

Overdrafts are repayable on demand, whereas credit card debt isn't.

So getting the £2.8K debt on to a credit card...any card...would be a smart move if the credit card APR is equal to or less than the overdraft EAR.

0% would be ideal (so look at MBNA cards and their money transfer feature), but 6.9% APR for 3 years saves you at least 2 BT fees.

The minimum payment is probably either 1% plus interest or 2.25%, whichever is the greater, so in your case it'd be 2.25% (£90 on a £4K debt).

xSmithx

I am aware it's not the best offer ever, but right now it's the best I can get. I wanna pay this off potentially before 3 years, with any bonuses etc i may get from work and when it's at a reasonable level I can 0% balance transfer it and pay the same and clear it off quicker.
I won't be tempted to pay the minimum, as I need it to be gone! I just think as its all in one place it would be easier to manage it!

I saw you worked out how much interest I'd be paying a month and what not, can you show me the calculations or show me a site where it would do it for me?
Sorry I'm just really bad at working out stuff like this effectively!

xSmithx

YorkshireBoy wrote: »

Overdrafts are repayable on demand, whereas credit card debt isn't.

So getting the £2.8K debt on to a credit card...any card...would be a smart move if the credit card APR is equal to or less than the overdraft EAR.

0% would be ideal (so look at MBNA cards and their money transfer feature), but 6.9% APR for 3 years saves you at least 2 BT fees.

The minimum payment is probably either 1% plus interest or 2.25%, whichever is the greater, so in your case it'd be 2.25% (£90 on a £4K debt).

Yeah my terms are : 2.25%
- £5 ( entire amount if less than £5)
Interest since last statement plus 0.10% of remaining balance (after interest and charges)

So you say It would be about £90 a month? I'm aiming to pay 150 a month, but possibly could stretch to 180 so I'd be paying 2 at a time then.

The 1,200 is Already on MBNA through virgin.

Thank you, sorry for being so stupid about this! Probably why I'm in this mess! Haha xo