Large credit card debt & overdraft, best course of action?

specificus

Good afternoon wise MSE members, I would really appreciate some advice.

I have accumulated a lot of debt (don't judge please, a lot of things happened that got me here) and I'm just looking at various ways to deal with it.

I have 13500 on a Barclaycard (nearly maxed out, 14500 credit limit), plus 3000 overdraft on my NatWest current account (in pretty much permanent state of overdraft). I also had a Tesco credit card at 11000 credit limit but as I haven't used it for a while after transferring my balance to Barclay they have closed my account (in a hindsight, maybe it wasn't wise to let that happen?)

I'm looking at options of either getting a personal loan to cover those debts and start from scratch (I would need to get around £20,000 to cover some upcoming payments that I can't avoid as well, and the fixed monthly payment looks appealing), or finding a long term balance transfer offer for the credit card debt AND getting a smaller personal loan to cover the rest.

In the past I've found it was easy to get a balance transfer offer using MSE's tools, but this time round I'm having no luck (I've just missed one credit card payment which I've paid only a few days later, could that be the reason?).

I have just tried MBNA and they would only give me 14 months 0%, there's no way I can clear the debt in that space of time, and it showed like 95% chance on the MSE tool, the others were 50% or 0% so likely I won't even get that on others!

So basically my question is, what is the best way for me to go forward. I'm leaning towards a personal loan (if I can get it!) - but would love to hear opinions.

Thanks.

imbigron

Why not go for the 14 month one at 0%? If you can put your overdraft and cc debt onto that, it gives you the option to pay off a small amount each month and not accrue interest. At the end of 14 months, if you have managed to avoid incurring further debt, you then have a smaller balance to switch to a new card, and might get a longer 0% period if you are lucky.

Dobbibill

specificus wrote: »

Good afternoon wise MSE members, I would really appreciate some advice.

I have accumulated a lot of debt (don't judge please, a lot of things happened that got me here) and I'm just looking at various ways to deal with it.

Hi specificus, Welcome to the forum.

We are not here to judge, we will just give our honest opinions of your best options.

You have taken a while to accumulate this volume of debt so don't expect a quick fix.

I have 13500 on a Barclaycard (nearly maxed out, 14500 credit limit), plus 3000 overdraft on my NatWest current account (in pretty much permanent state of overdraft).

You need to find out what your interest rates are on both debts. The one with the highest APR should be your priority.

I also had a Tesco credit card at 11000 credit limit but as I haven't used it for a while after transferring my balance to Barclay they have closed my account (in a hindsight, maybe it wasn't wise to let that happen?)

Possibly but that excludes you from existing customer BT offers with them. That was a substantial limit that could have been utilised.

I'm looking at options of either getting a personal loan to cover those debts and start from scratch (I would need to get around £20,000 to cover some upcoming payments that I can't avoid as well, and the fixed monthly payment looks appealing), or finding a long term balance transfer offer for the credit card debt AND getting a smaller personal loan to cover the rest.

Consolidation of debt rarely works and there are numerous threads on here evidencing that. To do a consolidation loan you have to be very very disciplined. That's not to say that you wouldn't be but best intentions by many, fail.

In the past I've found it was easy to get a balance transfer offer using MSE's tools, but this time round I'm having no luck (I've just missed one credit card payment which I've paid only a few days later, could that be the reason?).

I have just tried MBNA and they would only give me 14 months 0%, there's no way I can clear the debt in that space of time, and it showed like 95% chance on the MSE tool, the others were 50% or 0% so likely I won't even get that on others!

The missed payment may well be a contributory factor. Has it been reported to your CR yet? Don't panic, as time passes, it's impact will lessen.

I have to agree with PP to accept the MBNA card. Admittedly you have said you will struggle to pay it off within the timescale but it does buy you just over a year at 0% on some of the debt, credit limit permitting. Did they tell you how much the credit limit was likely to be? Or did you not get that far in the application?

So basically my question is, what is the best way for me to go forward. I'm leaning towards a personal loan (if I can get it!) - but would love to hear opinions.
Thanks.

You also need to address why you got into debt initially, purely because you don't want to get back into that position.

The other thing I would suggest is to complete a SOA, you haven't got to post it if you don't want to. The DFW Board will give you good advise on where you cut/save money so you throw as much as possible at the debt.

I hope this helps and wish you all the best tackles your debt.

specificus

Thanks Dobbibill and imbigron

I didn't get as far as what credit limit MBNA would give me. I'm concerned that might be less.

If I got a balance transfer card and then - later, or at the same time - applied for a personal loan with another provider, am I likely to get it as well? I've no experience with this.

You are saying consolidation loans rarely work. Is that because people take out a loan to cover say the credit card debt, but then keep spending on that same credit card again?

Thrugelmir

Rather than chase further lines of credit. Tackle the debt head on. Scrimp and save. Live on baked beans on toast etc. There are no easy answers.

redpete

specificus wrote: »

You are saying consolidation loans rarely work. Is that because people take out a loan to cover say the credit card debt, but then keep spending on that same credit card again?

That, and the belief that getting a loan is 'starting from scratch' rather than just moving the debt from one place to another.

specificus

Thrugelmir wrote: »

Rather than chase further lines of credit. Tackle the debt head on. Scrimp and save. Live on baked beans on toast etc. There are no easy answers.

That's what I'm trying to do, but not as straightforward when you have a family and health problems, so I have to be realistic with what's possible and what's not.

JimmyTheWig

specificus wrote: »

I have accumulated a lot of debt (don't judge please, a lot of things happened that got me here) and I'm just looking at various ways to deal with it.

We're not here to judge.
But we are here to help.
What many people in your situation do is realise that they are in debt, accept that "a lot of things happened that got [them] here" and consolidate their debt (often paying a higher rate of interest in order to reduce their monthly payments). But they don't actually address the things that happened to get them into debt, or their attitude to debt. They then get further in to debt for exactly the same reasons, or at least because of the same mindset, that got them into debt in the first place.
So the first thing I would do if I were you is to work out exactly why you got into debt, and exactly why you got into so much debt.
Then work out if you need to get further into debt in the near future. (What? Is that not what I've just been saving not to do? Not necessarily, I mean if you're a student, for example, you may be unable to work until the end of June in which case your debt will rise in the short term but that is probably better in the long term than giving up the course at this late stage.)
Then work out how to stop yourself getting further into debt above what you've planned for.

Then look at ways of reducing the cost of your debt, like shifting to the 0% MBNA deal, or (they do work out ok for a few people) getting a consolidation loan.
But I do suggest that you tackle the causes of the debt first.

jde-tv

Have a look into personal loans and see how much the repayments would be per month, if you can afford them and still have enough money left over to live then there is your answer!

takman

jde-tv wrote: »

Have a look into personal loans and see how much the repayments would be per month, if you can afford them and still have enough money left over to live then there is your answer!

No that's bad advice. If they just look at the repayment amount they may end up taking a loan at a higher interest rate and pay more money overall. This will then leave them with a credit card that they can carry on spending on like other people have said.

Dobbibill

specificus wrote: »

Thanks Dobbibill and imbigron

I didn't get as far as what credit limit MBNA would give me. I'm concerned that might be less.

If I got a balance transfer card and then - later, or at the same time - applied for a personal loan with another provider, am I likely to get it as well? I've no experience with this.

You are saying consolidation loans rarely work. Is that because people take out a loan to cover say the credit card debt, but then keep spending on that same credit card again?

No-one can tell you with 100% certainty that you would be accepted for further credit. What I would say is consider the lenders view, the will look at a number of factors, income being one then look at current levels of borrowing. You've said this is £17500 and on paper you would be asking them to double this to approx £35k. They don't consider if you will/want to pay off existing lines of credit.
This is very often the reason consolidation doesn't work, as CCs remain open and become too tempting. A year later, all the best intentions in the world have given way to 'life events/circumstances' and we hear horror stories with twice the amount of debt.

The only other thing to add, don't look for a quick fix, it doesn't exist.