Debt consolidation is it worth it?

EssexHebridean

Some really good advice here. In the first instance while you think about things increase the CC payment to £300 a month. At least that means you're making more of an impact while you're working out your best course of action.

As others have said, the risk with consolidation is that nothing in the background changes - you continue to use a credit card but now have a loan to pay as well - pretty fast you'll reach the point where you have to default on one or the other and before you know it you're in even deeper.

First step in my view is to complete a Statement Of Affairs (SOA) - you'll find the link in my signature or in the sticky post at the top of the board. Get your budget straight and clear in your own mind, and especially bearing in mind your change of financial circumstances make sure it actually works as you think it will. CUT UP THE CREDIT CARD if you haven't already. If your budget works, you no longer need the card, and especially not one with that horrific rate of interest.

Address the causes, then treat the symptoms.

January2015

katie4 wrote: »

Hi it wouldnt be a secured loan, i have just started working full time (in a job that i have been in for ten years part time) so i have the extra money to pay for it
can i ask why it wasnt good for you?
this loan is with my local credit union

Mine weren't secured loans to start with. They were credit cards, loans, overdraft. Moved to a bigger consolidation loan, which started the debt cycle again and moved to a secured loan, which started the debt cycle again and moved to a bigger secured loan which is the biggest chain around my neck ever.

The reason it wasn't good for me was that a quick solution to money problems didn't teach me (or my husband) to deal with our debts, or teach us to live within our means and manage our money more carefully.

I am cross we were allowed to consolidate more than once. If you consolidate and then go back for more consolidation it is clear you have a debt problem. Don't get me wrong, each time I was so relieved to be offered a loan that I grabbed at it. I was desperate.

Creditors should look at why loans were given previously and if consolidation is a recurring theme they should insist on debtors seeking debt advice so that debtors are clearly aware there are other options open to them rather than just keep borrowing at higher interest rates and eventually even moving unsecured debt to secured debt and placing the very roof above their heads at risk.

Consolidation is a swear word in this house

[Deleted User]

January2015 wrote: »

each time I was so relieved to be offered a loan that I grabbed at it. I was desperate.

Been there.

Refinanced a consolidation loan TWICE.

bertiewhite

In my opinion - yes. I have lower loan payments and it will get paid off quicker.

[Deleted User]

bertiewhite wrote: »

In my opinion - yes. I have lower loan payments and it will get paid off quicker.

Provided you can stick to it, and not get tempted to run up the debt again, and/or refinance.

Also, in the OP's case the payments will not be lower than they are currently paying.

-taff

Consolidated from an initial 200 to a whopping 8,000, then the lightbulb came on and I realised I'd been in debt for 10 years when I could have been out of it for 9 and a half.
Consolidation works maybe one in a thousand times, because those people have

1] addressed why they were in debt

2]made a realistic budget and stuck to it

3]didn't believe they 'deserved' something so went out and bought it reagrdless, whether it wa sa holiday, a tv, a bag of make-up...etc.

4]didn't use easy credit instead of saving for things

Do those four things and the loan would be good

Don't do them and you'll be back in a few months saying what you said in your original post except with higher numbers.

Tranquil

For me, it has been a godsend. Rather than juggling four credit cards payments a month (juggling end of deals/changing cards frequently/ balance transfers/numerous calls etc.) I have one simple payment per month (and £70 onto one remaining credit card). This has worked so far ONLY because I literally cut-up the credit cards and cancelled and closed the accounts so I have no temptation to increase debt. I am also working on changing my spending habits and thinking about why I got into the mess in the first place.
Psychologically, I also feel less stressed having one clear payment each month and a clear end date. When I had lots of credit cards, I would always pay so much into my credit cards when I got paid but always ended up using them by the end of month. So now I feel I can budget better. I also got a good interest rate on loan. This is just my experience though and I wouldn’t want to be giving advice as I’m certainly not a financial expert!

RandomGuy235

There are a lot of really good replies here.

I also have a credit card with Aqua and in July of last year, my balance was £2,050. Fast forward 6 months and it's currently £980.

A consolidation loan would mean one payment and would save you interest but it won't address the problems as explained above.

The negative to doing this is that you will be adding a credit search to your account.

I would personally stick to paying off the credit card each month. Put £300 towards it each month as a minimum and if you can afford to pay any more, do that too.

I can't tell you how good it feels to see your balance decreasing and seeing your credit report improve because you haven't added a hard search.

You haven't stated what your credit limit is but once your utilisation is about 40%, you should see that it helps your credit report. Don't think about this as a way of paying off the debt but also a way of building your history back up and learning along the way.

bertiewhite

Bedsit_Bob wrote: »

Provided you can stick to it, and not get tempted to run up the debt again, and/or refinance.

Also, in the OP's case the payments will not be lower than they are currently paying.

Which is why I clearly said "IN MY OPINION"

enthusiasticsaver

Why are you only paying £150 per month to the credit card? If you can afford a loan at almost £300 a month why not put that to the credit card instead?