Credit card problems and interest extortionate

welsh_cake

Hi

I have gotten myself into a mess with credit cards and its all come to a head over the last few days. I am paying extortionate amounts of interest and just cannot keep up any longer. I have contacted Stepchange who have suggested that I contact my creditors and offer to pay £1 per month and to freeze the interest on my cards. Surely this is defeating the object? I will never make a dent in my debts if I do this? I always pay on time, but it’s getting to the point where the interest is so much that I am not bringing the debt down. I have tried to move cards to 0% but its gotten to the point where nobody will accept me.

I haven’t slept properly for days and feel utterly ashamed of myself for getting in this situation (yes, I know its my own fault).

I am hoping someone, somewhere has had experience of this and can give me some advice. I am being physically sick with worry and constantly crying. I really need to sort this.

Thank you in advance of any help/advice

Puzzcat

Hi,


I would think stepchange are suggesting you enter a dmp, have you done the online debt remedy on the stepchange website?


Usually people start by paying just token payments to each creditor whilst it is being set up. This allows you to build up an emergency fund. Stepchange will then split what money you have available (have you done the budget yet?) and will pay your creditors once a month. There is no guarantee that creditors will freeze interest but most do. Also do remember that your credit rating will be 'pants' and you are not allowed any access to credit whilst on a dmp.


You need to open a seperate basic bank account away from any debts to have your income paid into.


There is a dmp mutual support thread that contains lots of information about dmp's and is supported by long timers and new dmp starters so do try and have a read.
https://forums.moneysavingexpert.com/discussion/4988866

welsh_cake

Thanks. I feel really strongly about not entering into a dmp. I am keeping up with repayments it's just the interest isn't letting me make a dent.

Yes I gave completed the survey on stepchange and I take the points on board but If only I wasn't paying so much interest I could maybe start to clear things.

I hope this isn't a silly question but what's best: putting up with the interest or entering into DMP? I'm only just surviving to be honest but the future looks grim at the moment thinking about a life on dmp!

northerner999

Remember that although you may not be able to get 0% deals at the moment, that doesn't mean you cannot reduce the interest rates by shuffling things around.

Here is the MSE guide for exactly that scenario:
http://www.moneysavingexpert.com/credit-cards/cut-credit-card-interest

loveka

Hi there. Why do you feel so strongly about not entering a dump if you can't manage? You say it's 'just the interest' but the interest is all part of the debt. If interest is frozen then you can pay what you can and clear the debt off without paying any more interest. The downside to this is it will effect your credit rating, which will impact your ability to get a mortgage/ a good rate on a remortgage.

So if you can't afford the contractual payment then a dump is a good way to go as you can pay the debt off gradually. The amount you should pay is what you can afford after your outgoings are paid. The £1 a month is just for while the dump is being set up.

You can contact the credit card companies yourself and arrange this- it doesn't have to be with Stepchange. A dump would be such a weight off your shoulders, but it will affect your credit rating. You will pay your debt off quicker though, as you won't be paying the interest.

loveka

Sorry, entering a DMP, not a dump. Autocorrect I'm afraid!

welsh_cake

Thanks for the Advice. I am currently going through everything that I owe and am speaking with stepchange again tomorrow.
Thank you!