Credit card consolidation - are my sums right?

kiwicola

Hi all,

I'm new but hopefully someone could tell me I'm along the right lines?

I have the following credit card debts:

BARCLAYCARD - £9,601.86, 18.9%APR £250 P/M
HSBC CREDIT CARD - £2,877.89 19.9% APR £80 P/M
AMEX PLATINUM - £625.42 19% APR £25 P/M

Total balance: £13,105.17
Total interest: £6,034.00
Total: £19,139.17
Total monthly: £355

I have been approved for a £15000 loan at 9.9% APR, interest cost is £2,291.88, total cost is £17,291.88, monthly payment of £480.33.

If I make an immediate overpayment for the difference, that is £1,894.83 (plus about £280 interest savings on this amount), this leaves me with a total cost to pay of £15,103.58, a £4000-ish difference from the original total. This would be a monthly payment of £419.54.

I'd be really grateful if someone could confirm I've gotten my sums correct before signing on the dotted line.

Thank you!

DCFC79

Cant help with the sums but do make sure you cut the cards up and dont create more debt.

kiwicola

I haven't had the cards for any of these accounts for at least three years so this purely an interest reduction exercise, I'm not trying to get rid of the debt by moving it all to a loan, just reduce the interest and an earlier payoff to boot.

Xbigman

How did you calculate the CC interest as £6034 as that is the most likely place there might be an error?

Is there a fee for the £15k loan?
Can you make unlimited overpayments on the £15k loan?

As long as you don't run the CC debts up again this looks sensible.



Darren

redpete

Are you sure the monthly payment on the lian will drop after the overpayment? Often it stays the same but you pay it off earlier.

If you can afford £419 (or £480) a month to pay against the loan why are you not paying this amount a month off the credit cards?

kiwicola

I used a credit card calculator to calculate the total payable on each card by itself and added them together to produce the total you see at the top.

I have the option to reduce the loan term OR the monthly payment figure, I'm not aware there are fees that exist for loans besides the quoted interest rate?

I have gotten into a bad habit of paying the minimum on those cards and put savings away every month (bizarre I know) so I will offset the additional monthly payment from there.

Edi81

So if you have savings can you not use some of them to repay?

enthusiasticsaver

I presume that is over 3 years?

Are you not able to balance transfer any of those cards to 0%? That is a better way of getting rid of them. That would repay it at £400 per month for 31 months and save you the interest of around £2k. Really if you can afford to pay more and have savings the most cost efficient way of doing it is to use your savings, move the debt to 0% and up the monthly repayment to £420 or £480.

This is money calculator came up with slightly higher figures than you put but not noticeably so. £422 per month after you used the surplus to make a large overpayment. I am assuming £15k is the minimum so I wonder if this is a secured loan on your property? If so, there is bound to be admin fees etc on top

lopsyfa

Instead of taking a larger loan (and then immediately overpay), can’t you use the money you have right now to pay off some of the credit card debt and then take a smaller loan or better see if you can transfer the smaller balance to 0% credit cards. That will save you more in interest.

Sncjw

Have you actually been given that rate because most places you won!!!8217;t know your rate until you apply for it.

dresdendave

I've never been a fan of tackling debt by taking on further debt. At the moment you owe 13k and your plan is to convert this to a 15k debt.

If you can afford a £480 per month loan repayment then pay this towards the CC's instead of just the minimums. Plenty of advice on MSE about snowballing.

If you can BT any card debt to 0% go for it but don't use that as an excuse to reduce your total monthly repayments.

If you are really serious about dealing with your debts, post an SOA on the DFW board for advice on reducing your outgoings, freeing up even more money to throw at your debts each month.