Loan to pay off credit cards

roblob39

My wife and I have quite a lot of credit card debt. We are able to make the minimum payments (plus a few hundred extra per month) but we're wasting a lot of money on interest.
Our balance transfers are all coming to the end of their interest free period soon. Our oldest card (the one we transferred the debt from) still has the majority of the debt and a silly 23% APR.

We're paying off the debt at a few hundred pounds per month (plus another few hundred of interest) but currently it will take close to 10 years to reach the end... And in that time we'll have paid a ridiculous amount of interest!

We're considering applying for a loan to cover the old (23%) card, as the APR will be so much lower... But I doubt whether we'll get a big enough loan at a good rate, considering our existing debt.

If we tell them that the purpose of the loan is for debt repayment... Is that seen favourably? Or are we just too risky?

Gaz83

The risk (for lenders) with borrowing to repay debt is that many lenders won't trust that a borrower won't splash the cash on something shiny and end up with twice as much debt.

How much are you looking to borrow, and what's your salary?

engineer_amy

Are there any more 0% cards you can apply for? What does your credit file look like (not the score)


Try one of the soft searches to see the likelihood of getting accepted before you apply and even if you don't get offered enough of a credit limit to transfer all of the debt, transfer as much as you can off the highest interest charging card/s

foxy-stoat

List out your current debt and interest rate, balances and minimum payments, and months left till the new interest rates hit.

How much have you managed to clear on the oldest card debt, ie starting balance and likely finishing balance?

If the difference isn't very much then I would not look at taking out any more credit as the zero interest transfers are not clearing then debt for you, only parking the interest for another year or 2.

engineer_amy

foxy-stoat wrote: »

If the difference isn't very much then I would not look at taking out any more credit as the zero interest transfers are not clearing then debt for you, only parking the interest for another year or 2.

Only if they don't use the money they are saving on interest payments (especially from the large balance at 23%) to reduce the debt.


If you do get some balance transfer cards, you must be disciplined with the money and don't look at the interest savings as "spare money", make sure you use it to pay down the debt. And as you clear balances, close the cards so you aren't tempted to spend on them again.


To many people fall into this trap and end up owing more than they started with, or as foxy mentioned just parking the debt for a period before the interest payments start again.