Stick with CCs or get loan?

Red-Squirrel_2

Hello, new to the board and after opinions please! Apologies for long post.

I have about 10K worth of credit card debt. I know this isn't great, its due to a temporary drop in income while I was retraining for a new profession (and a bit of overspending, can't deny it). I'm now qualified and in a permanent job with a better salary, hurrah! So...time to sort out the debt!

I have just over 7k on a card with my own bank, minimum payment about £145, I tend to pay £160, so not clearing it very fast.

I have £2750 with another bank, minimum payments around £80, tend to pay £90-100. Also, not clearing very fast!

So I'm currently paying about £250 a month and only knocking about £20-30 off the total, which is rather depressing and will obviously take years.

I've just applied for a personal loan with my own bank for 10K to clear the CC debt. Best interest rate they can offer me is 13% over 7 years, total interest paid will be 5K, monthly payment is £185.

So...is it better to take the loan and be free of it all in 7 years (hopefully less with overpayments) or should I stick with the CCs and try to throw as much as I can towards them as and when?

Finally, which is better for credit score, multiple CCs or 1 personal loan? I own my house and would like to think about moving in about a year, so I need to consider what will look best on any mortgage applications. I've never had any late or missed payments, no PDLs, no CCJs etc.

Sorry for going on, thanks in advance for any advice!

Tixy

What are the APRs on the 2 existing credit cards?

If you can afford £250 a month then I wouldn't take on a loan with repayments of only £185 a month.

edinburghlad

I'm with the OP. If you can afford £250 a month, why not like look to reduce the loan term to say 5.5-6 years. This will save you interest aswell.

MrWillyWonka

You would have been better off with a 0% balance transfer than with a loan, you'll probably pay significantly less interest that way and you'll have an incentive to throw even penny at the other debts before the interest free period runs out on the balance transfer card.

You probably need to do some maths to work out the best deal.

Red-Squirrel_2

Tixy wrote: »

What are the APRs on the 2 existing credit cards?

If you can afford £250 a month then I wouldn't take on a loan with repayments of only £185 a month.

The 7K one is at 20%, I think the lower one is 18%.

I can technically afford £250 a month, but then I'm only paying a tiny bit over the minimum payments, and not putting anything into savings for emergencies.

What are the downsides of a loan compared to CCs? Does one affect credit score more than the other?

Before the last few years I'd never had real debt other than my mortgage so I'm a bit clueless on it really!

Red-Squirrel_2

I've also got one eye on a mortgage application in 12-18 months. Not to borrow more just to move area, but I know that they've got a lot more picky since last time I bought when they just threw the cash at me practically!

Any thoughts on what looks best to a mortgage lender?

Million_Percent

You should look into a 0% balance transfer card or a low percent lifetime rate card. There are some great deals around right now if you have a decent credit rating (which you'd probably need to have to be accepted for the loan anyway.