Should I consolidate my interest free debt

January2015

Your post makes no sense whatsoever. If you divide what you owe by £700 per month it will take the same amount of time to pay off regardless of whether it's debt A, B or C as long as you manage to keep them all at zero interest - which you have at the moment. It doesn't matter if Debts B & C just sit there whilst you pay off Debt A. They are not accruing interest and once Debt A cleared you will hit the next debt with £700 per month. The important bit is - can you keep them at zero interest.

So nothing technical about it, your debt is decreasing by £700 each month. Unless I have completely misunderstood.

Sea_Shell

But if you could pay £100 against debt A and £100 off debt B, rather than £200 off debt A you wouldn't be any better off, as debt A 0% would still expire first and would have more o/s on it.

constantly_confused

I think I am getting what the op is saying (I think).

Please correct me if I am wrong!

You have a selection of cards, all offering 0%. You have transferred balances to these cards at different times. This means that the interest free period end on different dates.

The problem is that you have some interest free periods ending sooner, but due to the way allocations are made to your cards, it means that these ones are not being paid off first?

Is that it in a nutshell?

Sea_Shell

I think it's the other way round... The ones expiring soonest ARE being paid off first.

January2015

Sea_Shell wrote: »

I think it's the other way round... The ones expiring soonest ARE being paid off first.

That was my understanding of the OP situation.

3flyingjs

January 2915 - Yes my debt is decreasing by £700 a month but the time it is taking to pay off is NOT decreasing. In fact it is increasing because the money I am paying off is not going to the entire sum. For example, the money I pay to credit card A goes to debt A (due to the credit card's debt allocation system). But i have £10,000 on debt B (which is on credit card A). By the time I've paid off debt A, there is still £10,000 left on debt b and I have eaten into the interest free period on Debt b. So in a few months time I have to move it...

Sea shell - you are right the ones expiring soonest ARE being paid off first which is good of course, but the stress is that I don't see an end to the length of time to pay to pay the debt off. Which I would have if I had a fixed loan to pay into.I can't pay £100 off debt A and £100 off debt B because the allocation automatically goes to the ones that expire soonest...while the others just sit there.

3flyingjs

You know what guys...Thanks for reading and responding but I think it's just getting confusing for everyone and I can't explain it any more - it's giving me a headache :-). I'll work it out I am sure. Have a good day!

Silver_Queen

But surely if you're paying £700 per month off your debts you will pay the entire sum off as planned, if they continue to be on 0%?

It sounds like you haven't taken into account the 0% rates expiring when you've calculated your debt free date.

Try the snowball calculator on stoozing.com, it will work it out for you.

If you are paying a set amount of money to a set amount of debt per month (i.e. not accruing interest), it will not increase the time taken to repay.

theoretica

3flyingjs wrote: »

January 2915 - Yes my debt is decreasing by £700 a month but the time it is taking to pay off is NOT decreasing. In fact it is increasing because the money I am paying off is not going to the entire sum. For example, the money I pay to credit card A goes to debt A (due to the credit card's debt allocation system). But i have £10,000 on debt B (which is on credit card A). By the time I've paid off debt A, there is still £10,000 left on debt b and I have eaten into the interest free period on Debt b. So in a few months time I have to move it...

Sea shell - you are right the ones expiring soonest ARE being paid off first which is good of course, but the stress is that I don't see an end to the length of time to pay to pay the debt off. Which I would have if I had a fixed loan to pay into.I can't pay £100 off debt A and £100 off debt B because the allocation automatically goes to the ones that expire soonest...while the others just sit there.

I think you are confusing the date your interest free deal ends (set by the bank) and the date you will manage to pay everything off (set by how much you pay). Just because you have debt with an interest free date of 2019 doesn't mean you couldn't pay it all off and have a debt free date of tomorrow if you had an unexpected windfall.

I think your problem is muddling the maths of your total debt going down with the psychology of needing to extend the interest free date. The bottom line is the more you can throw at your debt the faster it will be gone.

Potbellypig

3flyingjs wrote: »

I REALLY need some advice please. I have £21,000 in debt. This is all spread over several 0% interest cards and I manage all these cards and interest free periods with the use of a comprehensive spreadsheet. I move each debt before its interest free period ends. I pay £700 a month towards this debt, spread across all the cards, and am slowly chipping away at it. However, I have 2 or 3 balances on the same card which have different interest free periods and I am not able to pay off the debt which has a later interest free period.

For example on one card, the interest free period of Debt A ends on 1 Jul 2018 and the interest free period of Debt B ends on 1 Jan 2019. Because of the way the payments are applied, everything I pay to this card goes to Debt A. Debt B isn’t touched until Debt A is paid off. So when Debt A is paid off, then I only have a few months left of the interest free period for Debt B, and Debt B is the same amount as it was when I started. I have the same situation on 3 of my cards. Even though I am paying no interest on these debts, I am starting to think that it may be better to get a debt consolidation loan and just pay a one fixed amount which will clear the whole lot. Even though I am paying a substantial amount to this debt, I can’t see an end to it, plus I am getting concerned that my options for interest free cards will soon dry up.

I put the figures into a loan calculator on my bank’s website and found that (theoretically) a loan for £21000 over 5 years would cost me £380 a month. And it would all be paid off in 5 years - less if I can continue to pay £700 a month like I am now (or £500 maybe – 700 is quite difficult.). Of course this is all assuming my bank will lend me this much money. I don’t know. Does anyone have any advice? Seems crazy to “choose” to pay interest on debt but I just need to see an end to this and it’s causing me a lot of stress. Advice gratefully received. Thank you.

Funnily enough, I just done exactly this, albeit on a smaller scale. I had £3644 of debt on 0% deals but I've got some expenses coming up which I could do with some financial help with. So I just got a £5000 loan paying £95 a month to clear the debts and get the other stuff I need. I've just upped my debt by £2000 in one foul swoop, but I felt like it was the right thing to do. £95pm is more than manageable compared to the £300 I was paying before, the stress of worrying about the other bits to buy is gone, and I'm just paying one payment a month. Cons is obviously the higher debt and I'll be paying it for a lot longer than I would have I carried on the other way. What I'm trying to say is, if it feels right to you, go for it. But don't spend on the cards again, obviously.

Although, I'm not sure you'd even get a loan for £21k though.