Advice on what I personally should do

crazyshady

Everyone is different, I know that and I'm not in a position like most of you that can pay off balances within a certain amount of time. I wont go into a lot of detail about it but about 3 years ago I helped family members out with some things and did a few things the wrong way and with that things that should have been paid back quite quickly weren't and so my balance went up and so did the interest. Right now I think my balance is around £2500 with a £4000 spend limit. I am with Halifax and I pay around £50 per month towards it. I am unemployed just now and getting benefits aswell as being carer for my Dad.

I only found recently that you could transfer balances of credit cards onto other cards. It sickened me a little bit because I don't actually use my credit card, all I'm doing is paying off the balance and the interest is over £40 every month so basically it's not going down much, I'm just making minimum payments just because I need to. I could pay more but not a whole lot more and I suppose I'm just waiting for the day I get a good job to pay it off quickly. To think that if i had known about this even a few years ago I could have had a lot of that balance paid off is baffling to me. I did the pre-apply checker that MSE have and the only one that came up was the Capital One 0% until November 2014 3%.


Can anyone tell me what i should or should not do. For instance if I could transfer it to another card, would i be better off? What would happen to my Halifax One card, would i just not be able to use it anymore and be closed down? Because I am only eligable, as far as the MSE calculator says, for one account, come November am I going to be stuck with the new card or would I be eligable for another 0% card and If i wasn't and was stuck with the Capital One card, would their interest rates be higher than Halifax? Sorry for all the questions.

grumbler

£40 monthly interest on £2500 balance is ~21% APR.
It's not a rocket science that 3% for 6 months is better, not to mention the best BT deals available.
However, when 0% expires in 6 months the rate reverts to ~35% APR that will quickly negate what you saved during 6 month.

So, do your maths. 21% is a reasonable interest. Unless you are in the position to pay almost all balance off before 0% expires it doesn't make much sense to transfer the balance. Alternatively you can consider life-of-balance low interest deals, but until you get a job you are unlikely to get accepted for any cards offering the best deals. ATM you can't be sure that even C1 accept you as the eligibility checker is very rough and doesn't guarantee anything.

eskbanker

crazyshady wrote: »

Everyone is different

I'm not!

Anyway, back to the business in hand, you need to bear in mind that any application you make for a 0% card will be evaluated as additional credit over and above what you currently have, i.e. even if you want to transfer the debt to a new card there will be a period where you have access to something in the region of £7K of credit. Securing this may be a challenge if you're currently unemployed, the eligibility checker is only a guide too and can't be relied on 100%.

Repeated applications for cards don't look good but there's no harm in identifying a card that looks the best bet and applying, but do make sure you check the APR for both the new card (post 0% expiry) and your existing one.

In the mean time, pay off all you can, it's a false economy not to, and it is said on here sometimes that just making minimum monthly payments are flagged as such to the credit rating agencies and that an extra amount (even just £1) looks better, although I can't vouch for this personally!

crazyshady

I understand what you mean. I don't even use the card at all. Sometimes I do pay extra but for instance this month i need to pay £52 on it so i'll probably pay £55 but it's not helping me out much. Do you think address can affect credit rating? My Mum passed away late last year and I know my Mum tried to get in with the credit union to save and I know a lot of people do that over time then borrow the amount the need to pay off their debts while still paying into the credit union but because my Dad and my brother many many years ago didn't pay what they owed, that came up on the system and so my Mum could only use it as a bank, she could save and save and never get a loan out all because my Dad and brother didn't pay something over 10 years ago. I know there is different credit unions but for all i know they could all be working together and sharing information or maybe your address does bring up a lot of flags.


Don't get me wrong I could pay a lot off, I could pay half that credit card debt off right now but it would leave me penniless and because I am caring for my Dad right now and on Income Support, I was relying on that money as a safety net because you never know what is going to happen. It's the interest i hate. It's like I'm paying what I owe and a little bit more every month but it's not doing any good.

eskbanker

crazyshady wrote: »

Do you think address can affect credit rating? My Mum passed away late last year and I know my Mum tried to get in with the credit union to save and I know a lot of people do that over time then borrow the amount the need to pay off their debts while still paying into the credit union but because my Dad and my brother many many years ago didn't pay what they owed, that came up on the system and so my Mum could only use it as a bank, she could save and save and never get a loan out all because my Dad and brother didn't pay something over 10 years ago. I know there is different credit unions but for all i know they could all be working together and sharing information or maybe your address does bring up a lot of flags.

No, credit rating is about the individual, not the address.

crazyshady wrote: »

Don't get me wrong I could pay a lot off, I could pay half that credit card debt off right now but it would leave me penniless and because I am caring for my Dad right now and on Income Support, I was relying on that money as a safety net because you never know what is going to happen. It's the interest i hate. It's like I'm paying what I owe and a little bit more every month but it's not doing any good.

If you paid off half of the debt then the interest payments would halve too! The desire for a safety net is understandable but you'd still have the available credit if you really needed it.

crazyshady

I understand that too but I'm not in a position right now where I could be able to get a job. The way I'm thinking just now I just want it paid off. It was only weeks ago I found out about how people could transfer their balances over to other cards. If I'd known that I would have tried it years ago when I was working. I'm thinkin Credit Union is an option to put a little away each week and hopefully over time get a good enough loan to pay off my credit card and then I don't need to worry about it. The credit card is the only debt I have. I've never had any other debt in my life.

I was looking at the Barclaycard credit card which has interest free periods for up to 5 months and I was getting that, using it for small purchases, paying them off and then closing it on the 5 month period and see if that somehow helps my credit rating. I don't know if it would or not. Do banks ever help customers out and give them an interest free period? I know they say if you have trouble making payments to contact them but the interest they charge means my payments don't really make a difference.

eskbanker

To be honest you really need to look at this from the perspective of interest earned and paid. As things stand you're paying something like 21% interest on the card, but you have some 'safety net' funds elsewhere which will be earning, say, 3% (maybe less) interest. In other words, a pot of, say, £1000 would reduce your interest payments on the card by £210 but keeping it as 'savings' will only earn something like £30. So, especially in the light of your comment about "The way I'm thinking just now I just want it paid off" it really makes sense to throw as much as you can at the credit card debt.