Need to lower APR; Talk to bank or wait?

techbloke

I’m after advice on dealing with a large credit card debt of roughly £22k, trying to reduce the interest rate.

For several years I’ve been running a software business. I borrowed money to fund it, based on various promised income, which hasn’t come in (long story; we’re unlikely to see it any time soon; trusted the wrong people, I know it was dumb). The business still isn’t making a profit, but I now have a team of highly-qualified co-founders working for equity, valuable background intellectual property, and a really promising new product, and have been awarded funding to work full time on it for a year from October, as a university employee. My wife is a student for another 2 years, and can’t get a part-time job due to poor health.

We’re paying about 25% interest. I’ve kept up payments, and have never been late or missed any. When we’ve taken our eye off the ball we’ve gone over our limits 3 or 4 times in 2 years; at most £100 for a week. To keep up my credit rating and not damage the business, I’ve never approached the card companies about lowering or missing any payments. As a result, my rating when I checked it recently was still “good”.

I’ve never drawn a salary, so have no payslips. We have no assets and our family can’t help. We’re claiming relevant benefits.

I desperately want to either convert this debt to a loan, or move it to one or more zero-percent card(s), so I can pay off as much as possible, but won’t get my first payslip for over 3 months. Should I wait until l have a couple and then try for a move, or take the paperwork for my university job in and talk to my bank?

Actually staying afloat until the end of October is also an issue, as our credit is almost maxed out.

All advice welcome, thanks in advance.

MEM62

Unfortunately, I think that you are between a rock and a hard place. Generally speaking interest rates on credit cards are not negotiable. They are applied based on how the lender views you as a risk. You could try looking for cards that offer a lower rate or even see it you can shift some of the debt onto an interest free offer. However, if your limit is almost maxed and you have missed payments you'll probably struggle.

I would say that a personal loan is a non-starter has you have no income to service the payments.

You could try seeking investment in the business as a way of keeping the business afloat for a while if you can convince an investor that it is a good risk.

Sorry I cannot be more positive. Perhaps others with better knowledge might be able to offer other suggestions.

andyfromotley

Hi tech bloke,

i think you can discount a loan. you are highly unlikely to get a loan unless its a suicidal interest rates.

You could try the eligibility checker on MSE to see if you can get a Balance Transfer card at a lower interest rate. Although again i think its unlikely as even if you are given a high chance of getting one when you apply and put nothing down as income you will be rejected.

If you cannot survive until october then you have little choice but to find an income elsewhere. Part time work? Perhaps you could milk your contacts to try and find a short term contract until then? Alternatively just take a normal full time job until then and then resign. ( a bit rough for the company but a decent solution for you). I doubt very much that this is what you want to do however you must be able to pay your bills and live. That is your first priority.

InsideInsurance

First of all, are these company credit cards or personal credit cards?

If personal, has it all been business spend or a mix of business and personal?

JeffreyR

I would definitely try and negotiate your rate down - can't hurt! It definitely seems like it's possible with Barclaycard

techbloke

Thanks for the advice. Sounds like there's no point going and talking to the bank. Back in the day you could talk to your branch manager and show them the whole picture, and a long-term history of responsible behaviour would count for something...

They're all personal cards; the debt has been run up on the business - paying programmers mainly, plus paying (home) rent, which arguably counts since I'm getting no salary from it. Plus all the interest.

I'm loathe to damage my credit rating by talking to the card companies, having hung on this long and spent so much keeping it up. We're just going to have to eke out what we have left until the first pay cheque, and try to bring in some extra work.

Does anyone know how many payslips I'll need to get a loan / balance transfer on a new card, please?

InsideInsurance

They will ask you to declare your income, they can then ask for evidence for you to prove this is true if they have any suspicions. This could be asking for bank statements or payslips/P60s etc. If they do ask for them its typically 3-6 months but it can vary.

Most places will check your answers against whats in National Hunter and if there has been changes then they may ask questions/ ask for evidence, particularly if its large improvements in your situation or something that cannot have happened (ie last month you applied for current account and said you'd been working with your current employer for 5 months and then today you apply for a loan and say you've been working for them for 3 years)

Personally never been asked to provide evidence though did once have to answer questions when I applied for a new account shortly after my salary doubled over night. The call was fine, offered a copy of my contract and they said it was ok.

meer53

I'd be wary of speaking to your card issuer, it may be against the t & c of your CC to use it for business purposes, you may find they pull the plug completely. Do you have a business account ?

techbloke

Hi meer53,

Thanks, I don't think they imposed any conditions on what I spend the money on - after all it makes little difference to them and they're making a fortune in interest. If they pulled the plug they'd lose a load of money too.

I have a current account (never overdrawn) for the business, but no credit card. I had a free one for a year but hardly used it and cancelled it.

meer53

techbloke wrote: »

Hi meer53,

Thanks, I don't think they imposed any conditions on what I spend the money on - after all it makes little difference to them and they're making a fortune in interest. If they pulled the plug they'd lose a load of money too.

I have a current account (never overdrawn) for the business, but no credit card. I had a free one for a year but hardly used it and cancelled it.

By pulling the plug i mean they may stop you using the card for further transactions and demand you repay what you owe.

In my experience, business usage on a personal credit card isn't allowed, it may be different for your card issuer, but my post was just a warning as to what may happen if you approach them.

Plus you would not be covered by Section 75 for any business transactions made using a personal card.