Credit card v Loan

Is it better to settle a credit card debt of £10,000 paying £200 per month to the CC company or taking a loan out? How do I calculate which one is more effficient (and saves me money)?


  • Bargain_Rzl
    Bargain_Rzl Posts: 6,254 Forumite
    If you are credit worthy, the best way to deal with the debt in the short term is to try to transfer as much of it as possible to a credit card with a 0% introductory rate for a good few months (in your case, you would probably want to apply for two or three to split your existing balance, as it's unlikely that a single CC company would give a new customer a £10k limit straight off). Then you can throw as much money at the debt as you can afford every month, to reduce it, while knowing you're not racking up additional interest. Then when the 0% period runs out, you can apply to move the debt again to another 0% card. Obviously, you should make sure you have a contingency plan in case you don't get accepted for new cards at this stage.

    If you cannot get more credit and are therefore unable to do a balance transfer, it all comes down to the APR on the debt. If you can find a loan at a lower APR than you are currently paying, then it seems an obvious choice to get the loan - as long as you aren't thinking about getting one that is secured on your house, which would require a serious amount of thought, not to mention some professional financial advice.
    :)Operation Get in Shape :)
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