Credit card or loan?

TheLearner2008

I am deciding whether I should move some of my debt to a loan or continue paying off the debt.

I have configured my debt snowball calculator with the expected payoff's in brackets.

Credit card #1 ~ £7,981.89 @ 23%
Credit card #2 ~ £3,967.00 @ 17%
Loan ~ £17,721.99 @ 4% (pay off 2019)

So I have no opportunities to for further 0% offers. I checked.

What I was thinking of doing is getting a loan to pay off the credit card debt over 2 years.

Any assistance would be appreciated!

enthusiasticsaver

consolidating debt does not usually work as the initial cause of the debt is not addressed. Before you know where you are you could have two loans , I assume you would keep the 4% one and then build up credit cards again. The only way I would suggest you doing it is if you can't get your existing credit cards on to a lower rate and there is an option of a low rate loan to clear them then cut up the cards and budget. Don't secure it on your home.

How did the credit cards balance build up and what was the original loan for? Do you have a mortgage? Putting unsecured debt on to a secured basis is not a good idea as it puts your home at risk.

TheLearner2008

Is 4% a low rate loan?

That is what I was thinking of doing is getting a 4% loan and then clearing my credit card debt and then cutting up the cards.

I don't have a mortgage.

The debt was primarily caused by visa applications and immigration applications but now that I have citizenship that is over. It was also caused by being unemployed for 3 months but I have a secure career now.

I am not going to lie I also used the cards for the occasional holiday!

Should I get 2 or 3 years?

MrsSave

When did you last spend on the credit cards? I'd be very wary of consolidating until you've at least stopped the spending, and not just for a month or two but long term. Many people who consolidate end up starting to spend on their credit cards again.

EssexHebridean

I'll echo what's said above - think long and hard before consolidating.

The two cards you've mentioned above - where are they now? Cut up/shredded or in your purse/wallet awaiting use?

Get yourself an SOA done and posted up here and people will be able to offer you help as top where you can make savings to get the debts gone faster.

DCFC79

Your debts are close to £30k so how much do you earn ?

From a lenders pov it looks like you want to take on more debt so will be adding to the card debt which is about £11.8k.

I don't think you will get accepted for a loan myself but I don't know what you earn ?

sourcrates

Consolidation is rarely the answer to good money management.


I remember my 30k plus credit card debt, that I consolidated with a loan, I swore down I would never spend on a credit card again, but I failed to close the accounts, and one drunken night, took out a cash advance on one of the cards, well that was it, I slid down that slippery slope like eddy the eagle on skis.


9 months later my debt was close to 60k, the !!!! had long since hit the fan, and only an IVA saved me from oblivion.


If you can be strict with yourself, it may be an option, but lending criteria is much tighter now than it ever has been, I doubt you will get a loan to cover what you owe, myself, I would be looking at other options.

enthusiasticsaver

DCFC has a point in if you apply for a further loan, even if you state purpose as debt consolidation there is no guarantee you will actually use it for this purpose so a credit score would be done on the assumption you will need to service 2 loans and 2 credit cards. You may find that difficult to get it accepted certainly at a low rate of interest. 4% is low for an unsecured loan.