Have I Done Right Thing?

Princess2790

I had 2 credit cards maxed out at £1,500 and £2,500 plus a £1,300 overdraft and a number of small store cards. Each had an interest level of around 39% APR. Ive just been approved for a bank loan which will clear all these debts at a rate of 7.5% ARP. Obviously this seems a good idea but just want to make sure I'm not being dim!!

sithemadmonkey

This works ONLY if you then immediately close down the credit that you've just paid off - this forum is littered with the stories of people who didn't, and then ended up spending on the credit cards again, leaving them with maxed credit cards AND the loan on top! Also, make sure you can afford the monthly payments - they may actually be higher than the minimum payments on the cards, as loans usually pay the outstanding balance off quicker.

Princess2790

The loan works out cheaper and I've already closed all the credit and store cards

sithemadmonkey

In that case you're good - just be careful not to take on any extra credit while you're paying the loan off. Have you closed off (or at least significantly reduced) the overdraft as well?

Princess2790

Totally closed off. Don't want the temptation!

Sanctioned_Parts_List

Hmm, also switch to a basic bank account, as the o/d facility doesn't go away otherwise.