The best way to clear this debt.

PhilUK84

Hey all.

This is my debt.

£1800 overdraft costs me £40/month
£1200 credit card costs approx £40/month
£1800 credit costs approx £50/month

That's around £150 in fees that I don't want.

I've paid off a lot of finance in the last year and in September the last of it is gone. I went from paying out £1200/month on finance, loans and credit cards to now just having my car loan which is £250 and the credit cards, and I haven't got any finance in a long time and I've learned my lesson. (Except on the car, but I think that's an acceptable loan)

I got my credit card debt down in the last year by paying large lump sums into them, £200 one month, £500 the next etc, but I've got a baby coming now and the things we need are starting to add up, and I also want to save a bit as I've got very little now.

It might not seem a lot to pay off but I'm paying the fees and with the added costs of having to buy all the baby bits it could take me a bit longer to pay it off.

What are my options? I'd like to maybe be able to get a card that will give me 0% on balance transfers and cash transfers and then consolidate it all onto that card. Or maybe a loan? That way my costs can come down, even if only by £50.

Any help is appreciated.

Thanks, Phil.

[Deleted User]

Your options depend on your circumstances, especially income, and credit files.

0% cards obviously reduce the interest to 0% in some circumstances, but you need an exit plan as it's not a long term solution.

What's your income and what is your credit history like?

In the meantime, make sure you pay any spare cash to the most expensive debt, not just randomly.

frazell

As above really, you need to prioritise these debts into order of interest rate. The one that has the highest interest rate is the one you focus on with any spare cash, just pay the minimum on the others.


If it was me and your credit rating is good then I would apply for a 0% balance transfer with the lowest fee possible. See what credit limit you get and try and move as much of the debt onto 0% as possible, starting with the highest interest card first.


Also you might consider moving current account to something like the Nationwide that will give you 12months 0% overdraft so you can stop paying the £40 fee for that.


If you manage to get all your debt over onto 0% and stop paying the £130 in fee then you can divert this into paying off the debt. Its clearly an affordable chunk of money as you are managing to find it each month right now.


I would then look at how you can make additional money to help pay off the debt.


If you need to change energy providers or broadband, then look at using a cashback web site, any spare cashback can go to pay off the debt. Obviously only do this if you are getting a better deal, don't do it just for the cashback!!


Then you could look at switching some current accounts around for switching incentive. If you and your partner can each switch through some accounts then you could get £200-£300 each time. It does affect your credit rating though so be mindful of that.


Lastly, I would set up an excel spreadsheet with the debt listed out in three columns. Each time you make a payment then log it on the sheet so you can clearly see your goals.


I always round off payments to the nearest £50..... so if you make a min payment and you're left with £1538.50 I just pay an additional £38.50 to round it off. You could do the same thing in £5 or £10 increments, it doesn't seem much, but I think it helps psychologically and also you know how much each debt is as they are whole numbers.


Review your spreadsheet weekly to allow you to manage overpayments and see how the debt is being serviced as you go. I think seeing it all on one sheet really focusses you and pushes you to clearing it.


All the details are available for the above within the forum.


Good luck!

PhilUK84

Income is approx £2500 - £3000/month after tax depending on overtime I do.

I could do £500 a month quite easily, but with the baby coming I'm going to have to pay for the pram, buggy, crib, car seat etc etc. Some of this stuff is £500 upwards!!!! And also my partner will be on maternity leave so her income will drop quite a lot so I have to pickup that drop. I wouldn't mind having a card that I could consolidate all of the debt on to which I could then just pay off over a year to 18 months, and then save the fees and some extra as saving, and then move onto another card if the 0% offer ends.

I'm paying £40 for my overdraft. £30 a month more or less for a £1 a day over £300, and then £10 extra for the account benefits which would drop to £5 if you don't use the overdraft. It works out to a similar interest rate to what I've got on the cards. Maybe slightly less, but there's also the threat that they could take the overdraft away. Although rare, it has happened.

I believe I have good credit history. I was in nationwide yesterday and the cashier told me i was pre approved for loans and credit cards and stuff so I should be able to get something. But I'm not sure if I can get a card that will give me 0% on cash transfers and 0% on balance transfers to a total of £5K.

Maybe changing to a Nationwide 0% overdraft would be good for the overdraft, and then a 0% card for the remaining?

Preferably the best option is the 0% mortgage, 0% balance transfer. Anything like that about?

[Deleted User]

0% mortgage? No.

You need to find out what rates your paying on the cards and which is the most expensive debt. Then look for a BT/money transfer card with a decent offer. Try one application and see how you get on.

You have a reasonable amount of debt, but your income may support further borrowing - although that depends on your credit history. Look at your three files to see if you have missed payments or any other negatives.

For some of the baby stuff, see what you can get from Freecycle and friends (although not a car seat). There's a huge gulf between what new parents spend and what they actually need to spend.

frazell

Sounds like you need to get sorted out quickly before baby arrives.


There are a whole raft of fee free 0% balance transfer cards on the market;


http://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards#nofees


These give you between 22-24month interest free. Don't just stick with Nationwide if its not giving you what you need.


My experience with Barclaycard is that they give you pretty high credit limits and you might be able to get all of the debt onto a single card. They have a fee free 0% card for 22 months at the moment. It doesn't really matter if you have to apply for another card and span the debt though.


You could also apply for a money transfer card and pay of the overdraft with that. There will be a fee to do that though, lowest is 1.69% of the amount with Virgin (£30.42 for your £1800).


http://www.moneysavingexpert.com/loans/cut-loan-overdraft-costs#virgin32


If you're really that strapped for money then you could ask for a payment holiday from your mortgage provider whilst your partner is on maternity. It really should be a last resort in my opinion.

bigadaj

Deleted_User wrote: »

0% mortgage? No.

You need to find out what rates your paying on the cards and which is the most expensive debt. Then look for a BT/money transfer card with a decent offer. Try one application and see how you get on.

You have a reasonable amount of debt, but your income may support further borrowing - although that depends on your credit history. Look at your three files to see if you have missed payments or any other negatives.

For some of the baby stuff, see what you can get from Freecycle and friends (although not a car seat). There's a huge gulf between what new parents spend and what they actually need to spend.

Who knows, maybe 0% mortgages are the next thing with bond yields going negatives it's a crazy world we live in nowadays.

PhilUK84

0% mortgage?!!! Where did that come from?!

I meant to say money transfer lol.

I did try a virgin card a few months ago but I was turned down. I might try again.

The finances are okay, it's just that last little bit that I think is going to hold me up. I'll have a look into the options, thanks.

PhilUK84

Okay. I can't get the Virgin Card nor could I get a similar MBNA card.

I can get a Halifax card with 0% balance transfer with a 3% fee for 20 months. So I'm going to do that.

I can then look at maybe doing the Nationwide account.

Sound like a start?