Credit Card and Payday Loans

Legskeattch

Good afternoon,

I have some pay day loan debt, not enough that Im in a panic each month, but enough for me to be thinking about alternative sources to pay it off at a lower interest rate.

Im a novice with credit cards having never owned one.

I understand through using Sunny that I can't just use the credit card to pay it off so my thought process was to use the credit card to pay Food, gas & electricty, phone bill, council tax, talk talk bill etc and use the cash 'saved' from monthly earnings to smash the payday loan.

Then pay the credit card each month.

Is this a sensible plan?

Thanks in advance

jonesMUFCforever

It could be if a) you qualify for a credit card and b) if you are single minded enough to repay the credit card without paying interest?

However as you seem to have a payday loan can/will you..............?

[Deleted User]

That would be preferable to paying interest on the PDL.

However, you may be severely limited in options of getting a card with history of payday loans.

Legskeattch

Thanks for your swift replies.

My credit rating is very good in fact but payday loan was an error in judgement that I regret. Its the thought process of I earn well enough to pay this off and you get complacent.

My mindset has certainly changed.

YorkshireBoy

Legskeattch wrote: »

My credit rating is very good in fact but payday loan was an error in judgement that I regret

You'll find out how good your credit rating is - as perceived by people who actually lend money, not Experian et al - when you get round to making a credit card application.

But with a payday loan on your CRA files I wouldn't build your hopes up...especially if the loan was taken out this year.

Best of luck though.


What's the outstanding debt?
And the repayments?
And the APR?

Legskeattch

Thanks YorkshireBoy

If I was successful in getting a credit card - would the example above be an effective way of reduce interest payments and good way off reducing payday loan amount?

bigadaj

Your plan is fine, it would be useful k owing how much you are talking about and how long this would take to pay off.

Your method is probably the simplest way, but if you qualified for a 0% purchases card you could throw more money at teh okay day loan as you would just pay the minimum on the credit card until you paid the loan, and then clear the purchases card before the 0% deal ran out.

Alternatively if you could qualify for a 0% deal with a card with a money transfer facility then you could get the whole amount off the card, typically for a one off fee of maybe 3%, and then pay this back over an extended period.

The last two suggestions are of course subject to meeting the lenders criteria, which may well be difficult with a payday loan on your file, and subject to your having the will not to spend the new credit line of the cards you would be applying for.

thomasfox

Deleted_User wrote: »

That would be preferable to paying interest on the PDL.

However, you may be severely limited in options of getting a card with history of payday loans.

YorkshireBoy wrote: »

You'll find out how good your credit rating is - as perceived by people who actually lend money, not Experian et al - when you get round to making a credit card application.

But with a payday loan on your CRA files I wouldn't build your hopes up...especially if the loan was taken out this year.

I took out about £6k from QuickQuid this and last year until a friend of mine told me that payday loans mess up credit scores. I paid off all of them loans way before due dates.

I applied for 3 credit cards in the last 3 months and was approved for all of them: HSBC - £6k, Vanquis - £1.25k and Tesco Foundation - £250.

Also, my credit score has been increasing each month for the past 32 months since I've signed up with Experian.

Perhaps payday loans aren't that bad if paid before time? I mean, the biggest QuickQuid loan was for £1,450 and I cleared that one within 6 days.

[Deleted User]

Payday loans are terrible for your credit history.

And the score that you're seeing doesn't tell you how lenders view you. It's a fictional number designed to sell credit monitoring services.

thomasfox

Deleted_User wrote: »

Payday loans are terrible for your credit history.

And the score that you're seeing doesn't tell you how lenders view you. It's a fictional number designed to sell credit monitoring services.

I'm not disputing it - I know nothing about credit scores apart from the fact that I have to pay everything on time so I don't mess it up.

Just being curious as to why would I get £7.5k worth of credit if I had taken out nearly 20 QuickQuid loans in the past 2 years. I'm only getting into it now .

YorkshireBoy

thomasfox wrote: »

Just being curious as to why would I get £7.5k worth of credit if I had taken out nearly 20 QuickQuid loans in the past 2 years. I'm only getting into it now .

Seems a bit of an odd bunch...2 sub-prime cards and a card that's supposed to be difficult to get due to very stringent credit checks. I'm guessing you bank with HSBC? If that's the case then that explains the £6K limit.