Best option for clearing Credit Card Debt?

mumofthetwins

vanillarice wrote: »

Thanks Lisa,

Unfortunately, the best option she was offered when using a "soft search" eligibility checker was a credit card of £1500, which will only clear half the debt of one card and we can't see it being of much worth.

Hi could you not possibly shift the half then clear and then hopefully more BT offers will open up ?


you may need to check the affordability for the loan though as I am sure you need to be able to cover a certain %age rise in interest or cover both loan and cc repayments (even though you are consolidating .. something to do with responsible lending) .. im sure someone with more knowledge will be along who will know x

Drawingaline

Consolidation loans are generally not seen as a good thing. However they can work in some situations. If you and your partner are convinced she will not access the cards again while painting a loan at a vastly reduced Apr it may work. Filling out a comprehensive SOA would be the first thing, that way she can see exactly what she needs on a month to month basis for living. Although you are paying the big things it would be advisable for her to have a small emergency fund, maybe £500 set aside for anything that may come up.

If she goes ahead with the loan she needs to under how the interest is applied. Is it front loaded or daily? How would any overpayments affect the interest and loan term etc. You say she is paying £500 atm, and a loan could reduce it to around £350 a month, then she could possibly afford an over payment every month,even an extra £20-50 could reduce the term and interest.

However she needs to be committed to this. So many people (myself included) have consolidated and then carried on spending on the cards. It's only with this last two loans I have actually got into the rythum of overpaying on a monthly basis and clearing them sooner.

There is a link to a comprehensive SOA in the sticky at the top of the board, you can lost it up here for people to help with or print it out and do it at home with bank statements etc.

vanillarice

Thanks everyone for their replies.

She has an appt with her bank tomorrow to see what they can offer (if anything) but I have impressed upon her the importance of just getting the figures and whether she will be accepted, and we can then make a decision over the weekend, away from the pressure of sitting in a room with someone.

RandomGuy235

Just my two pence but I would advise against any further borrowing including a consolidation loan.

I know it makes sense when you look at it on paper and she will feel better knowing she is paying less each month but more often than not, people in this situation don't learn from their bad spending habits and end up in more debt than they began with.

She wants to reduce her credit card debts and improve her credit score. I'd suggest that she continues to pay off her cards each month, as much as possible and stops applying for credit.

In a few months, review her eligibility again for any 0% balance transfers and if none are available, carry on paying off and not applying for credit.

My credit card was almost £2,000 a few months ago but the balance is now £828 - I haven't applied for any credit so that I don't add searches to my history. I'm hoping that paying off my credit cards will improve my history.

Good luck to you both.