Best debt consolidation option

Mallowmarshmallow

I have just discovered my husband has £18,000 debt. He is working on the root of the problem and I am prepared to help him work out how to repay it. It's currently on two credit cards and one unsecured loan.

Is it as easy as asking you knowledgeable people what the best way to consolidate would be? We have a shared mortgage, he earns fairly good money and has a good credit rating.

Would it be best to put some/all on an interest free credit card? An unsecured loan?

I will be helping take control of his finances and would prefer for minimum payments not to be extremely high but to have the option of overpaying without incurring excessive early repayment fees. I would prefer no loans secured against our home.

Many thanks in advance for any advice you can share.

blisteringblue

Consolidation is never a good option, been there done that multiple times. You end up with more debt. Your best option is a Snowball if you ask me.

Have a read here http://www.whatsthecost.com/snowball.aspx

Basically you add your debts to the calculator and their interest rates and you overpay the highest interest debt until paid off, you then snowball that payment onto the next debt until all paid off.

Karonher

The advice tends to be not to get a loan to cover cards unless you are sure you will not run up the debts on them again. I would suggest 0% card transfers and paying off as much as possible that does not go onto them - still making sure you can pay them before the 0% runs out.

Do you know that you will definately be accepted for 0% cards?

I would also cut back as much as possible for the next 12 months to get rid of as much as you can.

Mallowmarshmallow

The cards have all been cut up so he can't use them again but my initial thoughts were that a loan wasn't a good idea.

I'm not sure if he will be accepted for the 0% cards but credit rating is good and he was accepted for an £18k loan so is that a good sign? I'll have a look on the main mse website and see what the best 0% credit cards look to be.

I'm already meal planning and seeing where we can cut down.

The loan he applied for had repayments of £400 a month for 5 years but I can't have the reminder of this hanging over us for that long and he can afford far more than that so I'm keen to make payments much higher for less time.

blisteringblue

I would check in the small-print that the loan allows over payment? You can still snowball with the loan as the primary payment as long as you can overpay it.

HappyMJ

wayneandhannah wrote: »

The cards have all been cut up so he can't use them again but my initial thoughts were that a loan wasn't a good idea.

I'm not sure if he will be accepted for the 0% cards but credit rating is good and he was accepted for an £18k loan so is that a good sign? I'll have a look on the main mse website and see what the best 0% credit cards look to be.

I'm already meal planning and seeing where we can cut down.

The loan he applied for had repayments of £400 a month for 5 years but I can't have the reminder of this hanging over us for that long and he can afford far more than that so I'm keen to make payments much higher for less time.

If he has a spending problem getting the cards re-issued will not be difficult at all. Where's the money gone?

You need the cards to balance transfer from. Once you've transferred the balance you need to close the accounts so they cannot be re-issued.

Mallowmarshmallow

It has been a spending problem, help is being sought so all I can hope is that it is successful but I realise it'll be a long road with risks along the way.

I realise that cards can be reissued, but obviously the accounts can't be closed currently until balances are cleared.

HappyMJ

wayneandhannah wrote: »

It has been a spending problem, help is being sought so all I can hope is that it is successful but I realise it'll be a long road with risks along the way.

I realise that cards can be reissued, but obviously the accounts can't be closed currently until balances are cleared.

I would as the balances are being brought down ask for the credit limits to be reduced every 6 months to match the outstanding balance at that time.

The less credit limit he has available then the less opportunity there will be to increase the outstanding debt.

What sort of interest rates are on these cards? If you can reduce the interest rates so some sort of reasonable figure then you'll get the debt repaid quicker. If you can't get 0% balance transfer cards try to apply for one that charges a low rate of interest instead.

Mallowmarshmallow

HappyMJ wrote: »

I would as the balances are being brought down ask for the credit limits to be reduced every 6 months to match the outstanding balance at that time.

The less credit limit he has available then the less opportunity there will be to increase the outstanding debt.

What sort of interest rates are on these cards? If you can reduce the interest rates so some sort of reasonable figure then you'll get the debt repaid quicker. If you can't get 0% balance transfer cards try to apply for one that charges a low rate of interest instead.

Thank you, they're really helpful ideas, especially the credit limit ones. We haven't yet sat down properly and looked at credit rates etc, so I'm not sure what the rates are yet. I think one is just coming to the end of the 0% interest free so presumably about to rocket up.

(I have never had debt or borrowed money apart from a mortgage so am not particularly familiar with credit cards/loans etc)