Best plan (for me!) when clearing cards?

Adams_Dad

Background:I have a few thousand on a number of CCs (some sub-prime, some mid range) and they also have a good amount of unused credit on them. Don't know when I last defaulted - but it would be a long time ago - not been anywhere near debt collectors, though payments have tended to be minimum amounts.

Looking to the future, I am about to clear most/all of the debt.

My sub-primes (C1 and Aqua) are the ones I have had longest. Recently though, the cards I have been able to get have been better rates (best is about 15% with low credit limit).

To increase my credit score going forward and hopefully get down to sinlge figures or even the holy grail - 0% - I plan to keep the sub primes but get them to slash my available credit (maybe £500 each) to prevent new lenders thinking I have too much credit available - I want to keep them active because they are 6/7 years old (and I believe that is good for credit score).

I'll also close some of the higher mid-range cards because they are only 12-24 months old.

Does it sound as if by cutting my available credit in this way, I will be more attractive to the low-% cards?

[Deleted User]

Make sure you ignore your credit score when making these kinds of decisions. It's a made up number so you'll make all the wrong decisions.

Lowering limits on a number of cards will likely make you look untrustworthy to lenders. If you feel you have too much credit, then close a card or two.

What cards and limits do you have?

Adams_Dad

Hi ZX81

Thanks -

Name / Limit / %age

• Capital One 1200 30.34
• MBNA 2400 18.9
• Clydesdale 600 18.9
• AA 1900 21.71
  The ones above are currently almost maxed out
• Cashplus 2000 20.11
• Argos (Store card) 1500 29.9
• Aqua 4200 37.4

[Deleted User]

You can't afford to lower any of those limits or lose any cards until you get your debt down.

Best plan of action is -

- clear cards as soon as possible
- pay as much as you can to the highest rate card, and minimums plus £1 to the others

Once you've build up some decent history of just using two or three of the cards and clearing in full each month, think about doing some housekeeping on the cards, starting with the high rate sub prime cards.

smithers1981

Hi you should pay them off in order of highest APR first, have you looked or applied for a balance transfer card? If you could shift some of the higher APR debt to 0% this could speed up paying it of.

I would risk applying for one or maybe two 0% offers, as you have nothing to loose and you may get a nice surprise.

Candyapple

Snowball your debts:
http://www.whatsthecost.com/snowball.aspx

You have £6k on high interest bearing cards...OUCH!

If you could manage paying £300 per month:

It will take you 25 months to pay off these debts if you snowball correctly. During that time, you'll pay £1,269.00 in interest.

If you could manage paying £500 per month:

It will take you 14 months to pay off these debts if you snowball correctly. During that time, you'll pay £649.00 in interest.

See the difference?

I would clear those ASAP by whatever means possible. Overtime at work, get a second job, sell stuff you no longer need, make a budget and anywhere you can reduce costs throw it towards the debts.

Once those debts are cleared, or maybe halfway through clearing them, I would try and apply for a 0% balance transfer card to see if I could reduce the interest/debt down any further and then once the entire debt is repaid, then I would revisit the situation and look at closing probably all of the cards and just starting again with mainstream ones.

Adams_Dad

Adams_Dad wrote: »

Looking to the future, I am about to clear most/all of the debt.

I expect to be in a position to have all those cards cleared within 2 months. Although, I do wonder if paying off in big instalments would benefit me - as then my recent payments will have not been minimums. EG, I owe Aqua £2100, so £700 x 3 months maybe?

This is start afresh time, I won't need the massive amount of credit, what I want is a much smaller amount but at better rates!

I am very much getting the feeling that my idea of keeping (but not really using) the v high cards to take advantage of my long standing status is not much good?

[Deleted User]

The problem is, you only have a modest amount of credit now.

Once you have some better cards and limits, you can drop the aqua/Argos /cashplus stuff.

Adams_Dad

Deleted_User wrote: »

The problem is, you only have a modest amount of credit now.

I'm virtually on minimum wage, I don't WANT more credit, and surely prospective lenders know that (if I used it all) I can't afford the £15 grand I have, so wont want to risk offering to lend me potentially un-affordable credit on top of what I already have?

[Deleted User]

If your income is low, the drop the high rate cards once you've cleared the balances.

Adams_Dad

Thanks - I shall - but do I drop them because they are expensive OR because they harm my standing in the eyes of prospective new card companies