Should I take out a balance transfer credit card?

Joyfull22

Here's my situation:

I have a Vanquis 39.9% APR card with about £1,000 on it and an 18.9% APR student credit card with £500 on it. Altogether around £1,500 of debt I'd like to clear.

Ideally I want to be in a position where I have one good card with as low an interest rate as possible i.e. neither of the two cards I have at the moment.

I was thinking of getting a balance transfer card to help me pay the balances off quicker. But looking at the cards available I'm noticing that the 0% rate seems to expire after a certain length of time (around 24 months usually). I'm confident I could pay off the balances in two years with a balance transfer card - however, once I pay off my debts then my understanding is that I'd left with a credit card with a not particularly favourable interest rate that I wouldn't need to use since my debts would be cleared...

So once I'd cleared my debts I'd be left with 3 credit cards, none of which I'd be using as none of them have particularly good interest rates. So I'd ideally want to take out a much better card in case I needed to use it...

How would it look on my credit record to cancel three credit cards?

What use is a balance transfer card once I've paid off my debts?

Should I take out this third card to help me pay off what I due?

Many thanks.

grumbler

Joyfull22 wrote: »

...however, once I pay off my debts then my understanding is that I'd left with a credit card with a not particularly favourable interest rate that I wouldn't need to use since my debts would be cleared...

Well, credit cards can be used for day to day expenses, not necessarily for a long term borrowing. In this case they don't cost you anything, but provide extra convenience in managing your finances and extra protection.

So once I'd cleared my debts I'd be left with 3 credit cards, none of which I'd be using as none of them have particularly good interest rates. So I'd ideally want to take out a much better card in case I needed to use it...

How would it look on my credit record to cancel three credit cards?

Nothing very bad, but will your credit history not stop and then dry out in a few years?
Also, you can cancel the old card(s) right after transferring the balance(s).

Should I take out this third card to help me pay off what I due?

Well, as a (former?) student you can calculate how much you can save by getting such card and decide whether it's worth to bother. There are many online calculators, e.g. this one: Balance Transfer Calc

Benji17

have a Vanquis 39.9% APR card with about £1,000 on it

You must transfer this balance IMMEDIATELY - assuming your credit status is ok. Don't apply for a new card 'willy nilly' if there isn't a good chance you will be accepted. Assuming you will be, try and arrange to transfer this balance ASAP, and then cut up the Vanquis card and close that account.

once I pay off my debts then my understanding is that I'd left with a credit card with a not particularly favourable interest rate that I wouldn't need to use since my debts would be cleared...

So once I'd cleared my debts I'd be left with 3 credit cards, none of which I'd be using as none of them have particularly good interest rates. So I'd ideally want to take out a much better card in case I needed to use it...

If you think you'll be accepted for a decent balance transfer card, and then apply & get a sufficient credit limit, transfer the balances, and then cancel the other two cards. Once you've repaid the balance on the new card, either stick with it or cancel that too. Credit cards don't have particularly attractive interest rates (16% is pretty good), as the point is you repay in full each month. If that's unlikely, get rid of the credit card once the balance is cleared. But if you really want the 'insurance' of having available credit, you'll just have to grin and bear it.

planteria

agree with Banji.. getting that balance onto 0%, if possible, is vital.

at the same time it's important to use 0% card accounts wisely, and ensure that you don't spend money you wouldn't have spent otherwise.. ideally you use the full borrowed amount to make money.. ref. stoozing forum.

Nasqueron

Why not just transfer it, close off one of the other 2, wait a little while and apply for a good card and then close the other old one, you would then have a BT card you are paying off (which you close at the end) and one good card?

planteria

agree with Nasqueron.. i don't suggest retaining Vanquis.

Alexd52

Agree with the above answers, also, to make life simpler it is usually best not to spend on that card when you are carrying a 0% balance transfer.

Candyapple

If you think you will struggle to clear £1,500 over the space of 2 years (roughly £65 per month), that coupled with the fact you already have a subprime card and have a £1k balance on it incurring interest and also a student card implying you are a student, I am guessing you won't be eligible for any of the prime cards which offer the decent balance transfer cards which leaves you up the creek without a paddle.

In your scenario, I would advise you to post over on the Debt Free Wannabe board along with a statement of affairs. You will probably also need to get a job part-time or otherwise if you aren't already working, or find a way to increase your income because at that eye-watering 39.9% APR you are not going to be making any inroads in clearing your debt, you'll just be covering the interest every month.