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Debt Consolidation Help

Hello,

I'm after some advice, I want to try and consolidate some of my debt, I currently have 2 credit cards (both at 18.9% apr) one is with Lloyds (£1k) and one is with Barclaycard (£2.5k). I also have a loan with my bank (20.9% apr) for £5.5k. I'm wondering whether the best option is for me to shift the credit cards to a 0% interest credit card or to extend my loan to pay off the cards, I can get the additional money at the same rate and would be able to pay an additional £200 per month on top of my repayments in the aims to cut the interest and pay the loan off quicker...

When shifting the debt to a 0% card, is there a limit on the amount you can transfer?

Are there benefits to either option?

Thanks in advance for any advice.

Comments

  • -taff
    -taff Posts: 15,414 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Consolidating all debt is very dangerous, because the trap is you'll take another credit card out, or keep using the one you transferred a balance form, then 2 years down the line you are attempting to consolidate a much bigger debt again.
    I did this personally for about 10 years, my final consolidation was about 10,000 about 5 years ago.

    I cut up the cards, moved the balances to new 0% ones, cut those up too and paid it off as I went.

    Trust me, it's a lot easier in the long run to deal with them rather than consolidate a total debt.
    Non me fac calcitrare tuum culi
  • PeacefulWaters
    PeacefulWaters Posts: 8,495 Forumite
    What's your plan to reduce and repay the debt?
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    sophieg wrote: »
    Hello,

    I'm after some advice, I want to try and consolidate some of my debt, I currently have 2 credit cards (both at 18.9% apr) one is with Lloyds (£1k) and one is with Barclaycard (£2.5k). I also have a loan with my bank (20.9% apr) for £5.5k. I'm wondering whether the best option is for me to shift the credit cards to a 0% interest credit card or to extend my loan to pay off the cards, I can get the additional money at the same rate and would be able to pay an additional £200 per month on top of my repayments in the aims to cut the interest and pay the loan off quicker...

    When shifting the debt to a 0% card, is there a limit on the amount you can transfer?

    Are there benefits to either option?

    Thanks in advance for any advice.

    the lower the interest rate the better

    the more you repay each month the better

    so getting a 0% BT CC, if you can, is a good idea

    transferring CC debt at 18.9% to a loan at 20.9% makes no sense
  • lynz68
    lynz68 Posts: 323 Forumite
    You have to keep in mind that you may not get a 0% credit card they are usually reserved for those that have a good credit history.

    The fact your own bank gave you a loan at such a high interest rate would suggest that your past credit history has not been great. Was the previous loan for consolidation as well?

    But to transfer debt that is at 18% to a loan at 20% is not cost effective.
  • triple_choc_chip
    triple_choc_chip Posts: 1,140 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Xmas Saver!
    edited 25 May 2014 at 12:04PM
    If you have the means to pay, why bother consolidating? That's usually the pathway for people struggling to maintain their monthly payments.

    If you can afford another £200 a month, throw it at the card with the £1K balance; when added to your usual payment you will smash it in four months. Then use this money to overpay the second card, at approx £300 a month this will be gone in 8 months maximum.

    Of course if you manage to get a 0% card this process will be faster.

    Then enquire if you can make overpayments to your loan and if not save up the outstanding balance and pay off in full.

    Use the snowball calculator to find out your debt free date.
    http://www.stoozing.com/calculator/snowball-calculator.php
    Debt Free 🍾 since 6.8.13 £31,997
    Saving for 🎄 🎁 2025 £545/£800 68%
    6 mth 🆘 fund £6k
    Mortgage offset fund £24.7k/£38.4k 64.3%
    It turns out the answer to my problems wasn’t at the bottom of this tub of ice-cream, 🍨 but the important thing is that I tried...
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