Moving debt to a CC... Now have doubts!

clownstyle

Hi all,

So I have a massive overdraft of £3000 that I had been living in for a long time now. Each month I would pay £44.62 just in overdraft charges alone.

On top of that I was paying £33.99 on a loan at a high APR (29%)

AND on top of that I was paying £47.33 for a finance agreement that I had on a sofa...

All in all £125.94 a month :eek:

I've never had a credit card, never wanted one, and glad I didn't have one etc etc... A lot of people have told me of the benefits of using one to clear debt, especially on high interest debts where I could be paying 0% instead.

Now I might add that I haven't missed a payment on a thing.. ever. I have a budget and still found it impossible to shift my overdraft, living to my means I guess.

So I've taken the plunge and got me a card. I was accepted for a Virgin money transfer card with a £5000 limit. My plan is to transfer what I need to cover the overdraft and my other debts, and pay the minimum required amount for a while.

Am I right in thinking if the balance is not cleared within my two years I can simply transfer the balance to another card (with a lower amount) and continue to pay 0% interest? Obviously I will drop more into the pot if possible.. This just seemed a good idea to me (have been thinking about it for the past few months)

However, now I'm doubting myself and my decision. Was this a good idea?

Any tips for the future? :money:

Candyapple

Yes it was a good idea.

One thing though, I would advise not to just 'pay the minimum' because you never know what is around the corner - i.e. you may lose your job/become ill/some other life changing event that in 2 years time may affect your chances of being able to get another 0% deal, that is to say if they will still be around then (hopefully they will but never say never).

Set up a direct debit to make the minimum repayments and then make any extra payments on top of that, at least to the equivalent of what you were currently paying, knowing that it will all be going to clear the debt and not just interest.

[Deleted User]

clownstyle wrote: »

Am I right in thinking if the balance is not cleared within my two years I can simply transfer the balance to another card (with a lower amount) and continue to pay 0% interest?

It means you can apply for a BT offer, but you need to be prepared for the eventuality of not getting it.

What would you balance be at the time? Would you be able to cope if the remaining balance went to your go-to APR on the Virgin card?

Not saying it's not a good idea, but you need to have a plan and understand which debts you should move. For example, I'd imagine it certainly makes sense to pay off the 29% loan, even at your usual Virgin card APR.

clownstyle

Deleted_User wrote: »

It means you can apply for a BT offer, but you need to be prepared for the eventuality of not getting it.

What would you balance be at the time? Would you be able to cope if the remaining balance went to your go-to APR on the Virgin card?

Not saying it's not a good idea, but you need to have a plan and understand which debts you should move. For example, I'd imagine it certainly makes sense to pay off the 29% loan, even at your usual Virgin card APR.

£3000 Overdraft
£425.97 Finance
£663.48 Loan

Lets just call it £4090 as the total amount..

1% of £4090 is £40.9 which in the 32 months i have the card will only be £1309 paid off, the APR on the card is 18.9% so not great... Certainly not better than my overdraft.

Food for thought, at least I know what I'm getting myself in for! So to pay off the debt in full (32 months) I will need to pay £128 per month.

So it's slightly more than what I'm paying now.. but in the long run I should be paying less overall. RIGHT? :rotfl:

[Deleted User]

Definitely. If you clear the balance before the promo expires, you'll benefit greatly.

Alexd52

If you can pay it off within the 0% time then that is the best plan. Even if you, for whatever reason, end up a little short, you will have saved 32 months of interest/charges.
The other thing to mention is to ensure that you keep the rest of your finances under control so that you don't have to use the overdraft again

MallyGirl

clownstyle wrote: »

So it's slightly more than what I'm paying now.. but in the long run I should be paying less overall. RIGHT? :rotfl:

yes - what you are paying now only services the £3k overdraft. For the couple of extra quid you are paying it off as well. Just be disciplined and think how much better a place you will be in 32 months time if you have no debt.

clownstyle

Thanks for all your replies guys, really appreciate it.

I've been using the software YNAB (you need a budget) for almost two years now and it's really helped with my finances.

I had been creeping out of debt but I had to take a big pay cut. To cut a long story short I was looking after a large team of people in a corporate environment, getting home and working late.. While being great for clocking up overtime and paying of debt, my home life was suffering....

That's when we found out the OH was pregnant again and I swore I would get another job (just to be at home more and be able to help out and not totally frazzled by the end of work day)

I now work in a School, earn less.. Appreciate more, and spend more time with my family. It was worth it!

The budget is tight, but still affords us some treats per month without ever going over budget.

As of now the overdraft is gone... done, finito, cancelled

The other x2 loans have also been paid and DDs cancelled.

:beer:

MallyGirl

good stuff - onwards and upwards. I can understand your career move - family time is everything. I gave up a large salary at a big 6 (at the time) consultancy to move to part time and from home when my daughter was small. Totally the right choice, even though it has taken 12 years to get back to the sort of money I used to make.

m4rc

If you pay the £128 a month for 32 months you will be have cleared the debts and paid no interest, and it's only £2.06 per month than you currently pay as the bare minimum. Makes a lot of sense, means if you couldn't get another 0% card it won't leave you with interest to pay (there is no guarantee you would get another card for a range of reasons).

For under a tenner a week extra you can clear the balance in 2 years, that means you can then be debt free and use any extra funds for savings.

Superscrooge

clownstyle wrote: »

Am I right in thinking if the balance is not cleared within my two years I can simply transfer the balance to another card (with a lower amount) and continue to pay 0% interest? Obviously I will drop more into the pot if possible.. This just seemed a good idea to me (have been thinking about it for the past few months)

Don't make the assumption you will definitely be able to get another 0% card in 32 months time.
A lot can change in the finance industry in 32 months. Interest rates might be much higher. 0% deals might be non existent, or they might have a very high balance transfer fee and very short promotional period.

I would concentrate on repaying your debt during your current 0% period.