Paying off credit card - advice needed

wamballa

Hi there,

It would be great to get some advice on how to pay off my credit cards. My debt looks like this at the moment. I have a few credit cards & a bank overdraft.

Card / Debt / APR / Monthly Minumum Repayments:

Barclaycard / 9327 / 15.9% / 211
Virgin / 4043 / 18.6% / 113
Lloyds / 1404 / ?? / 40
Lloyds Overdraft / 2666 / ?? / 50 (usage and interest)
Tesco / 4286 / 16.9% / 45

What i have to pay off above debt with:

4000 cash savings
3480 0% offer on barclaycard until 01nov2014
300 monthly disposable income per month

One idea i have:

Pay off Lloyds Overdraft with barclaycard 0% offer
Pay off Virgin credit card with cash
Increase minimum repayments on barclaycard

Does this make sense or is there a better way. Any ideas would be greatly appreciated!

Cheers
Steve

grumbler

This does make sense if Barclaycard offer includes money transfers to a current account.

MallyGirl

Tesco APR is higher than BC so increase that one instead. The unknown APR on the Lloyds one looks like it might be high given the monthly minimum so make sure you have all the info before making a decision.

Mr_Goodkat

wamballa wrote: »

Hi there,

It would be great to get some advice on how to pay off my credit cards. My debt looks like this at the moment. I have a few credit cards & a bank overdraft.

Card / Debt / APR / Monthly Minumum Repayments:

Barclaycard / 9327 / 15.9% / 211
Virgin / 4043 / 18.6% / 113
Lloyds / 1404 / ?? / 40
Lloyds Overdraft / 2666 / ?? / 50 (usage and interest)
Tesco / 4286 / 16.9% / 45

What i have to pay off above debt with:

4000 cash savings
3480 0% offer on barclaycard until 01nov2014
300 monthly disposable income per month

One idea i have:

Pay off Lloyds Overdraft with barclaycard 0% offer
Pay off Virgin credit card with cash
Increase minimum repayments on barclaycard

Does this make sense or is there a better way. Any ideas would be greatly appreciated!

Cheers
Steve

It is unlikely that the Barclaycard 0% includes cash transfers to a bank account (normally only MBNA and Virgin offer this plus the fees for a super balance transfer are usually higher than a straight forward balance transfer).



You need to check the Lloyds card interest as if higher than the Virgin card you should pay that off first.


Use £2666 of your savings to pay off your Lloyds OD, unless a large portion of your OD is interest free this will be quite expensive and can be recalled on demand


I would transfer £3480 of the Virgin balance to 0%


Pay off the remaining Virgin balance with £563 from your cash savings


Unless the interest rate on your Lloyds card is 0% or much lower than either Tesco or Barclaycard I would throw the last of your savings £771 at that card to reduce the balance and focus on getting rid of that debt.


Once you have cleared the Virgin card and your overdraft with both reported to the CRA it may be worth applying for another 0% card. Given your level of debt you might not get it but worth a search. If you can get it transfer the rest of the Lloyds debt and as much of the Tesco debt as you can.


Keep the virgin card open don't spend on it and they may offer you a balance transfer deal in the future, if nothing after six months give them a call and see if they will offer you anything not to close the account.


The biggest thing is understanding why you have such high debt and how you reduce your spending and or increase your income otherwise you will never get out of this debt.


Good luck

lipglossqueen50

Hi,
My best advice would be speak with your bank about putting everything onto a personal loan. You will more than likely find your monthly payment will be a lot less and giving you an end date. That way you can keep hold of your hard earned savings. Regards

grumbler

lipglossqueen50 wrote: »

That way you can keep hold of your hard earned savings.

Should I Repay Debts or Save? - MSE article.

wamballa

Thank you all for this brilliant guidance. It feels good to finally face up to things and get control back. Reason for so much debt is I seperated from my wife last year so had hotel bills etc. Things hopefully are stable now. Based also on reading the article I think i have to reduce my debt with my savings first and bite the bullet at last.

Option 1: Take approach that Mr Good Kat described. Lloyds CC is 20% btw. Constantly look for more 0% options to move the debt onto. Pay down as much as I can each month from salary.
Option 2: Do option 1 then get a consolidating loan on remainder?
Option 3: Do option 1 then release equity on my home for remainder?

Does Option 2 or 3 make sense?

Thanks guys!

dresdendave

lipglossqueen50 wrote: »

Hi,
My best advice would be speak with your bank about putting everything onto a personal loan. You will more than likely find your monthly payment will be a lot less and giving you an end date. That way you can keep hold of your hard earned savings. Regards

The savings are probably earning about 2% interest, any loan would certainly be at a much higher APR, not a plan I would recommend.

Paul_the_Painter

Option 3 -terrible idea, don't do it.
Lloyd's may also offer you 0% deals, so clear that first as Mr Goodkat says. Virgin have also historically offered 0%, so keep that car open.
Bearing in mind the rates you have said about the lloyd's card, I would use your £4,000 to pay off all of your Lloyd's borrowing, transfer pretty much all of the Virgin to the 0%, then wait and see who blinks first and offers you a 0% deal.
Your excess £300pcm should go to the Tesco, as that minimum payment looks low, and they may well raise it at sometime in the future.
What sort of limits have you got on the cards? Although my bet is that Virgin will come in with a 12 month 0% that you can transfer the Tesco balance to. If you have a high limit on the Virgin though it may be worth waiting and not transferring the Tesco balance, as the 0% deal ending in November will come all to soon, and you'll be wanting to move it somewhere else!

PeacefulWaters

lipglossqueen50 wrote: »

Hi,
My best advice would be speak with your bank about putting everything onto a personal loan. You will more than likely find your monthly payment will be a lot less and giving you an end date. That way you can keep hold of your hard earned savings. Regards

Bewildering. Sorry.

wamballa

To Paul the Painter my limits are

Barclaycard: 14000
Virgin: 11200
Lloyds: 4250
Lloyds O/D: 3500
Tesco: 7000

So I am ready to go ahead with the plan:
Pay off lloyds cc and overdraft
Pay off virgin with barclaycard 0%
Increase tesco minimum each month

My question is what to do with the large BarclayCard balance where some of it is charging interest? Should i:

1 live with it until i find a 0% deal?
2 get a loan (10year?) to control the barclaycard loan

Thanks guys!