3.9% APR loan is misleading?

Silenciosa

Brambleberry wrote: »

Hi there Silenciosa,

You have been given some good suggestions by the other posters here - can I suggest your next steps should be to get pencil paper and calculator and work out exactly how much / how long it will take you to pay off your credit card as it stands and with your current rate of repayment.
Do this also with any possible loan or balance transfer you are considering.

(If you are still using your card each month, then it will could take even longer than you expect.)

I would advise against resorting to BOMAD unless you can't get a 0% transfer, it is far more satisfying to sort out your finances yourself, and also do think about what it is costing them in lost interest, their money is less "free" overall than a 0% transfer deal would be.

Do you have any savings? You could post a SOA on here to get some advice on how to free up more cash to pay down your debt faster.

Hth

Thank you also for the advice. I have to admit I wouldn't have a clue on how to work exactly as maths as you can probably tell was never a strong point for me :x
Plus not to mention I'd probably have a heart attack with the amount.
I don't use the c/card and the last time I used was for a high dental bill which came at over £2k I never used the card for everyday usage only high scary bills. But I do only pay something around £100 p/m which is probably where I am going wrong.

I don't know what a BOMAD is neither what an SOA is :x
Very new to forums and this whole new world of what's available out there.

I guess I'll have to stick to knocking on parents' door for some help to start with.

Thank you

Cornucopia

Putting "Holiday" as a reason for a loan is also a good way to get offered a higher rate.

MrWillyWonka

Silenciosa wrote: »

I haven't cleared off the card yet and just wanted to take a loan to make it a bit faster.

This is not the correct frame of mind to be in. All you are doing in this case is replacing a debt with a debt and with this logic you will be wanting to take out another loan to clear the previous loan just to make it clear faster... and so on.

If you have a 3K credit card debt and take out a 4.5K loan to clear the credit card. You have put yourself into even more debt by 1.5K.

BOMAD stands for Bank of Mum and Dad. Not to be confused with BODMAS (Maths).

SOA stands for Statement of Affairs. The form is here. If you post it here people here can make suggestions on potential savings. I know it isn't what you are here for but if you look at the bigger picture of why you have debt in the first place, posting an SOA can be lifechanging.

You've come to the right place for advice! As others have a said, a 0% BT is the way to go.

forgotmyname

I was the same some time back, You pay the CC bill and see it as a normal outgoing payment.

It was only after watching Martin on TV say that someone paying the minimum payment on a £4000? CC bill will be paying it for something like 80 years.

One thing that puzzles me is why have money in an emergency account making little interest when your paying more interest on money you owe.
If you have an emergency then use the card to pay for it. The total should be lower due to less interest paid anyway.

I know situations vary but something to think about.

Brambleberry

Silenciosa wrote: »

I guess I'll have to stick to knocking on parents' door for some help to start with.

Thank you

Try asking for help to better understand and manage your money first, you could ask your parents or another trusted friend or relative. While potentially this may feel awkward, you will gain far more in the long run than you could save on the interest of a card or loan.
You have a responsibility to yourself and your future to learn and understand the basics, don't be afraid to ask for help.

Silenciosa

Brambleberry wrote: »

Try asking for help to better understand and manage your money first, you could ask your parents or another trusted friend or relative. While potentially this may feel awkward, you will gain far more in the long run than you could save on the interest of a card or loan.
You have a responsibility to yourself and your future to learn and understand the basics, don't be afraid to ask for help.

Very true. It was the first time I visited this site and I have to say that it has truly opened my eyes.

Many thanks to all once again.

leespot

So many different reasons why the bank would increase the APR. I had a similar situation where the quoted rate was 4.7% APR and after applying they offered me 9.9%. No debt at all with anyone, but I've only lived in this house for a short time which could be a factor. Who knows.

As said though, 9.9% for you is way better than the credit card rates

20aday

If Lloyds Bank offered me a loan with an APR of 9.9% (even if the advertised offer was 3.9% I'd snap their hands off.

Unfortunately my credit file (and other factors) deem me to be a higher risk customer and the APRs quoted by them are above the loan I currently hold with NatWest.

As posted previously it's a lot cheaper than the interest rate your credit card is attracting.

redux

bargainbetty wrote: »

3. Taking out more than you need and doing anything other than making an immediate overpayment to ensure that you don't spend the money is reckless. If you overborrow to get a rate, pay back everything to reduce the interest you will pay overall - you will pay for that 'reseerve' and at a far higher rate than any savings account could give you.
4. Taking out a loan over three years for a holiday is just daft. Save up for it.
5. There is plenty of information online about applying for other credit cards with better rates and doing balance transfers. See item 2 for advice on whose job it is to look.

I must agree a lot with 3. The interest of 9.9% on £8000 is only a few quid different (in fact slightly more) from 21% of £3500 which sounds about what the current balance is.

So paying back at least half the new loan straight away looks much better.

The holiday can be much less expensive, a few hundred quid, and could wait.