Consolidate credit card debts or not?

MrsA27

Deleted_User wrote: »

I wouldn't apply for a new Halifax. I would clear it and hang on to it - there's a good chance you may get offered a BT once it's clear and not used.

Of course you only have a low limit on there, so it would only solve part of the problem.

If you do choose to consolidate, you'll need to lose the cards so you can't run the debt back up, and identify where the original debt came from, or it will just creep up again.

Thanks zx. I've cut up all the smaller limit 0% BT cards since I got them. The only reason the debt is not being cleared fast enough is the interest, I've made sure that I won't build up any new debt again.

MrsA27

Sam29 wrote: »

Dont apply for any extra debt. Consolidation rarely works because it doesnt deal with the problem. You would have to cut out ever using credit cards again for it to work and thats not realistic. It could potentially make things worse with big loan and credit cards debts. Basically its a myth that there are any quick fixes (apart from winning lotto!) its a case of slowly chipping away at what you have and slowly but surely things will get better. If it was me.i would pay a little extra each month to halifax (as previously mentioned) and the card charging highest interest. Then when halifax is lower balance they will offer you balance transfer deals and you can make an even bigger hole in card charging highest interest......keep chipping away and gradually they will all come down until you get to the stage where you will be closing cards and getting new balance transfer deals from all your exisiting cards. I would cut up all cards and only use one in emergencies. The key is not the balance on the cards but the interest being charged. This is the thing that will stop you paying it off. Concentrate on highest interest and snowball. Also chuck every spare penny at your cards to get em paid. So make a decision not to buy that coffee on way to work and throw three quid at the debt instead. Do this a few times in a month and you will be amazed at the difference it makes. Good luck

Thanks Sam. I'll take this into consideration before making a decision on whether to go for debt consolidation loan. The interest is really the main cause that's stopping me from making any good progress in chipping away at the debt. Which is why I was considering combining them all under a loan with much lower interest rate (13.9% fixed compared with variable 23% for credit card) and paying it off. This loan that I was quoted doesn't have any penalties for overpayment so I can basically throw extra cash at it to clear it up faster if I want to.

MrsA27

Dobbibill wrote: »

Debt consolidation rarely works and unless it means you are paying less interest and have addressed the original cause of the debt. Many people, even with the best intentions, come back in a year or so in a situation twice as bad.

With that in mind I would say approach that direction with caution.

zx81 has given very good advice, pay just over the minimums on all cards and try and pay down the highest interest bearing card first. Bide your time with Barclaycard & Halifax, it will only be a matter of time once the balances reduce for the offers to start seeping through.

Thanks Dobbybill. One of the first things I did in addressing the building credit card debt was taking care of all the factors which caused the debt to build up in the first place so I'm now left with finding a way to maximise the repayment, which is why I'm considering a consolidation loan with lower interest rate.

MrsA27

enthusiasticsaver wrote: »

Taking out a loan will not help you and consolidating debt rarely works just delays dealing with the problem. Why have the debts arisen? Is it normal living expenses or can you pick out what has been spent on the cards?

Start by targeting the highest interest rate card and pay minimums on the rest. Look to cut costs as far as possible and maximise income. Can you take in a lodger or do a second job? Anything you can sell and throw at paying off the cards?

Ultimately you need to work out where your money is going so I would post an soa (statement of affairs) on the DFW board.

Thanks enthusiasticsaver. All the root causes have been addressed and I'm now left with one aim which is to pay off the debt quickest and with lowest interest rate possible. I've been very strict, we've been cutting expenditure and even taking on second jobs but I'm just no match for the interest rate.

MrsA27

Marchitiello wrote: »

What about a loan with your bank at 5% or less in order to cover most of the debt? You could pay the high interest cards then free up some credit and hopefully receive new offer for the remaining of the interest paying CC debts.

Thanks Marchitiello, I've tried applying for personal loan with HSBC (my old bank) but they won't consider as I haven't been in the job long enough and the prospects of getting a loan with them is unknown in light of the credit/income ratio. Will definitely try paying off the higher interest cards and hope that I'll start getting new BT offers to pay off the rest of them.

MrsA27

Candyapple wrote: »

Lol, OP earns £22k and is £18k in debt, no lender worth their salt is going to lend them anything because of affordability, unless of course it would be at an eye-watering APR and even then, would probably only be for £1-2k as OP is at high risk of defaulting.

The low limits given by Lloyds and Halifax suggest that you are not in their high bracket of target customer so you'd be unlikely to receive any balance transfer offer deals from them. Halifax have been sending me monthly BT and money transfers offers since March 2016 and I've had 2 from Lloyds in the past 3 months.

You need to use this: http://www.whatsthecost.com/snowball.aspx

Enter your debts in order of highest APR and stick to whatever it says.

Barclaycard are actually your best bet of getting a BT/money transfer offer so you might want to try and pay a bit more monthly towards that if you can and check your online account because they send you offers there every month.

You didn't accrue the £18k debt overnight so don't expect miracles. It will be a hard slog paying it off, but once cleared, it will be a valuable lesson.

Thanks Candyapple. The website looks useful, will definitely give it a go.
Having made sure that no further factors will contribute to the build up of new debt, my focus now is reducing the debt. In fact, the balance has been reducing each month until the end of one of the 0% interest BT deal. It has indeed been a hard lesson to learn but I'm glad at least I'm able to control it before it spirals out of control or having to deal with it later in life.

MrsA27

Thank you to those who's contributed or commented so far. I'll give the various advice a try and weigh them up against the consolidation debt before taking the plunge. I'm determined to clear this!

Candyapple

MrsA27 wrote: »

Thanks Dobbybill. One of the first things I did in addressing the building credit card debt was taking care of all the factors which caused the debt to build up in the first place so I'm now left with finding a way to maximise the repayment, which is why I'm considering a consolidation loan with lower interest rate.

Can I just say, you may have been quoted a rate for a loan, however I am fairly certain if you actually applied for it, it would be declined. Moral of the story is don't pin all your hopes on receiving a loan to clear the debts.

Candyapple

MrsA27 wrote: »

Thank you to those who's contributed or commented so far. I'll give the various advice a try and weigh them up against the consolidation debt before taking the plunge. I'm determined to clear this!

Also to say I have been in your situation so I do understand (I was £15k in debt and there were no BT offers etc, had to work 2 jobs and make sacrifices). It still irks me today slightly when I think about the amount of money I paid in interest whilst clearing my debts, however being debt free is worth it.

Good luck.

MrsA27

Candyapple wrote: »

Also to say I have been in your situation so I do understand (I was £15k in debt and there were no BT offers etc, had to work 2 jobs and make sacrifices). It still irks me today slightly when I think about the amount of money I paid in interest whilst clearing my debts, however being debt free is worth it.

Good luck.

I share your anger/frustration. It's a really expensive lesson learned which I deeply regret. I'm also hesitant to jump straight onto getting a consolidation loan as it may mean the loan being secured against my home which I'd rather not have.